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At a news conference on Tuesday, June 29, Gov. Ed Rendell announced that an agreement in concept had been reached with leaders of the four legislative caucuses on a state budget for the 2010-11 fiscal year.

The $28.52 billion budget would not include proposed taxes on cigars or smokeless tobacco and would reject the adoption of combined reporting in Pennsylvania. The agreement also would keep in place the sales tax vendor collection allowance. However, the agreement calls for the legislature to pass a natural gas severance tax by Oct. 1 (to go into effect Jan. 1, 2011), the details of which have yet to be worked out.

Several state agencies would experience cuts under the budget, which Rendell said “is not without pain.” However, the basic education subsidy would increase by $250 million; the governor had sought an even greater increase.

The agreed-to spending plan does include some $800 million in yet-to-be-approved federal funds. If Congress does not approve those funds, legislative leaders and the administration would be forced to come to an agreement at a later date on additional program reductions.

The governor said he was “fairly confident” the June 30 deadline for passage would be met. If that happens, it would be the first time in the eight years of the Rendell administration that Pennsylvania had an on-time budget.

Stay tuned for more details.