Just two weeks after a budget deal was announced, House Democratic Leadership brought to the House Floor Thursday a significantly different tax revenue proposal than the one called for in the budget deal negotiated by the 3 Caucuses and Gov. Rendell. They did it because they could not get the votes they needed in their own Caucus to support the deal they agreed to.

By a very close vote of 103 to 98, House Democrats passed their $1 billion alternative tax plan which torpedoes the deal worked out with Senate Republicans, Senate Democrats and the Governor taking the budget process back to "square one," according to Senate Republicans.

The primary opposition came from House Democratic members who opposed taxing small games of chance and live arts performances as well as opposed additional drilling for natural gas in State Forests.

As a result, the House Rules Committee late Thursday amended and reported House Bill 1531 (George-D-Clearfield) to the full House as the omnibus tax bill for the budget. The bill, however, includes a natural gas production severance tax, a tax on smokeless tobacco and cigars as well as a significantly higher tax on table games that are not part of the budget deal.

It does not deal with the State Forest leasing issue.

The House Democrats released new details on their revenue estimates from their new budget proposal adopted Friday in House Bill 1531. (click here for briefing sheet)

The new information included a phase in revenues raised under the natural gas severance tax.

Revenue would begin to be transfered to these uses in January 2010--
-- 4.5 percent to municipalities where natural gas is taxed; and

-- 4.5 percent to counties where natural gas is taxed.

Revenues would begin to be transfer to the remaining uses in January 2012--
-- 60 percent to the General Fund;

-- 3 percent to DPW for low-income energy assistance;

-- 15 percent to the Environmental Stewardship Fund;

-- 4 percent to the Hazardous Sites Cleanup Fund;

-- 5 percent to the Liquid Fuels Tax Fund;

-- 2 percent to Game Commission; and

-- 2 percent to Fish and Boat Commission.

The legislation would also extend the Personal Income Tax Checkoffs for the Wild Resource Conservation Fund through January 1, 2014.

The Resource Enhancement and Protection (REAP) Tax Credit would be reduced from $10 million to $6.7 million for FY 2009-10 and 2010-11.

The Alternative Energy Tax Credit Program would be eliminated.

A planned vote on House Bill 1489 (George-D-Clearfield) authorizing a natural gas severance tax was put on hold in the House pending further budget discussions, but the bill was reported from the House Appropriations Committee and put in position for further action in case it's needed.

It is clear a letter to House Democratic Leadership from 31 House Democrats expressing concerns about more drilling in State Forests late Tuesday got the attention of Leadership, along with concerns about other elements of the negotiated budget package.

House Republicans have maintained they will vote as a block against the budget deal requiring the necessary 102 votes to pass the deal to come from virtually all of the House Democrats.

Senate Republicans, however, said renegotiating major elements of the budget deal would mean putting the process back to square one. Senate Leaders also said there is no support in the Senate for a natural gas severance tax.

Senate Minority Leader Bob Mellow (D-Lackawanna) was critical of Gov. Rendell Wednesday saying he is not engaged in talking to individual members to get votes for the budget deal, especially in the House, and as a result the budget discussions are at an impasse again.

After a hastily called meeting Thursday morning with the 3 Caucus Leaders and Gov. Rendell, the Governorsaid in a press conference he would be willing to get his hands dirty to get the budget deal to his desk by calling individual members of the House and Senate and getting directly involved in further negotiations.

The Governor said he would support the natural gas production severance tax next year and did not think it would be done in time for this budget. He said the industry needs some "breathing space." He did say there may be action in the House to try to pass the severance tax.

The Department of Revenue reported Pennsylvania collected $2.1 billion in General Fund revenue in September, which was $118.6 million, or 5.5 percent, less than anticipated. Fiscal year-to-date General Fund collections total $5.3 billion, which is $140.6 million, or 2.6 percent, below estimate.

Revenue collections are down $283 million over September 2008 and over $400 million over 2007.

Only 31 percent of voters approve of the budget agreement, while 37 percent disapprove and 31 percent aren’t sure, the independent Quinnipiac University poll finds. Gov. Rendell is most responsible for the impasse, 27 percent say, as 21 percent blame legislative Republicans; 9 percent legislative Democrats and 30 percent say they are equally to blame.

Gov. Rendell’s job approval rating remains decidedly negative, 42 – 51 percent, a slight improvement from his record low of 39 – 53 percent recorded July 21, according to a Quinnipiac University poll released this week. Only 26 percent of voters approve of his handling of the state budget, while 53 percent say he has been too inflexible and 30 percent call him courageous.

"Gov. Ed Rendell remains at the low ebb of his governorship when it comes to public opinion, perhaps not surprising given the lengthy budget stalemate. He does better with women, who disapprove 49 – 44 percent, than with men, who disapprove 54 – 41 percent. The legislature’s rating, where 27 percent approve and 64 percent disapprove, is even worse,” said Peter Brown, assistant director of the Quinnipiac University Polling Institute.

"But since the Governor is term-limited and voters tend to like their own representative or senator much better than the overall body, it’s not clear if the budget hassle in Harrisburg will have a major impact on Pennsylvania politics, at least for the 2010 elections.”

Pennsylvania voters split 43 – 44 percent on whether they wanted the budget to cut more spending or believing that further cuts would jeopardize vital state services. And 57 percent say that while it was not a perfect budget, they are relieved that the state finally has one. One-third, 33 percent, say lawmakers and the Governor should have kept working.