Lawmakers met with Governor Rendell again today, Sunday, August 2, for two hours, with still no progress in bringing the Democrat and Republican leaders closer to an agreement. Democrats presented a 13-page “must-have” list to Republican leaders, that would require around $1.6 billion in new taxes.

“It didn’t move us closer to a resolution,” Senate Majority Leader Dominic Pileggi, R-Delaware told reporters afterward. “In some ways, some of the positions they took made it more difficult for us to come to a resolution.”

Republican leaders are determined to avoid increasing income or sales taxes with their $27.1 billion budget proposal (Senate Bill 850). The Republican budget would tap into reserve funds and cut spending, forcing the government to “live within it’s means.”

The Democrats’ $29.1 billion budget proposal (House Bill 1416) involves a .5% personal income tax hike during one of the worst economic downturns in recent history.

Tomorrow, Monday, August 3, Democratic leaders are expected to approve Senate Bill 850, as-is, and send it to the governor. Rendell has announced that he will line-item veto all items that are not required for the Commonwealth to do business and sign the resulting “skeleton budget” into law. This will give Rendell authority to pay state employees and vendors. Counties, municipal governments, schools, and other programs will not receive funding under this skeleton budget. Since the skeleton budget is not a stop-gap measure, the Commonwealth would have the ability to pay it’s employees and vendors for the remainder of the fiscal year. If enacted, the skeleton budget would prevent further claims from unpaid state workers under the Fair Labor Standards Act. The Commonwealth is currently under investigation by the U.S. Department of Labor for violating the FLSA, by not paying it’s employees at least the minimum wage.

In another development during the budget stalemate,House Minority Leader Sam Smith, R-Jefferson, announced that his party is supporting a $27.5 billion budget proposal submitted by Rep. Nick Kotik, D-Allegheny, a leader of a group of conservative Democrats. Smith’s office helped craft the proposed budget amendment, which will not rely on any new broad-based taxes, such as personal income or sales taxes.