Democrats said they wanted to preserve programs for the vulnerable and to avoid severe cuts that might lead local governments and school districts to raise their own taxes.
"This bill does not seek to balance the state budget on the backs of our veterans, senior citizens, children, the disabled," said Rep. Phyllis Mundy, D-Luzerne.
But Rep. Dave Reed, R-Indiana, said the Democratic plan "perpetuates the economic philosophy that tells us that the road to economic prosperity is paved with higher taxes."
The Democratic plan excludes any funding source for nearly $1.3 billion in support for the State System of Higher Education, student loans, community colleges and a post-secondary technology school in Lancaster.
The Senate could now decide to alter the bill to more closely resemble a GOP-backed budget plan that imposed deep program cuts and calls for no broad-based tax increase.
"The House passed a phony budget that spends Monopoly money. Their proposal is unsustainable in the current fiscal year, let alone future years," Senate Republican spokesman Erik Arneson said. "We will work to quickly present a balanced, responsible alternative that does not increase taxes and send it back to the House for further consideration."
Rendell's proposal for a three-year, 16 percent increase in the personal income tax has run into stiff headwinds from Republicans as well as a fair number of Democrats who are worried about how it might affect the economy or their own re-election prospects. Rendell said he considered it the fairest and easiest way to balance the budget, which is now 17 days overdue.
"When you look at what will be necessary to cobble together the kind of money we need, it is abundantly clear to me ... that the fairest and in some ways the easiest way to meet the revenue needs" is to increase the income tax, Rendell said at a Capitol news conference.
He said he was willing to sign any budget that provides sufficient money to protect his spending priorities, such as education.
Also Friday, more than 33,000 executive-branch employees received only partial paychecks because the state lost legal authority for much of its spending when July 1 arrived without a budget.
An additional 1,000 employees of the state court system, who received partial paychecks on July 3, experienced their first payday without any paycheck. Employees will eventually receive their missed pay, but only after a budget is signed into law.
Also Friday, Council 13 of the American Federation of State, County and Municipal Employees filed a grievance alleging contract violations and is seeking interest payments on the missed pay.
"Employees who were hired to do a job and expected pay every two weeks have come up short," said its executive director, David R. Fillman. "It's totally disgusting."
The union also encouraged members to file complaints with the U.S. Labor Department alleging violations of the federal Fair Labor Standards Act, which requires timely payment of wages.
By Friday afternoon, "several hundred" Pennsylvania state employees had called or e-mailed the department's offices in Wilkes-Barre, Philadelphia and Pittsburgh regarding their paychecks, according to a department spokeswoman in Washington.
Rendell announced steps to help state workers avoid financial catastrophe, including the addition of 20 financial institutions willing to provide special low- or no-interest loans and more aggressive attempts to educate the government work force about the aid that is available.
In Philadelphia, Mayor Michael Nutter announced the city was delaying all payments to vendors who have contracts with the city and to review all new capital projects. Faced with its own $1.4 billion, five-year budget deficit, the city has asked the state Legislature to approve a temporary increase in Philadelphia's sales tax and a delay in pension fund payments.
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