HARRISBURG -- Republican lawmakers and corporate groups were comparing Gov. Ed Rendell to grumpy Ebenezer Scrooge because he vetoed a bill that would have cut business taxes.

Mr. Rendell, a Democrat, said he had no choice but to veto the measure yesterday because it would have blown a $53 million hole in the next state budget and cost the state $1 billion over the next five years.

That's not responsible budgeting because lawmakers didn't say what programs would be cut to make up for the lost revenue, said Mr. Rendell, who is seeking re-election in 2006.

Mr. Rendell's veto didn't go over well with House Majority Leader Sam Smith, R-Punxsutawney, or the Pennsylvania Chamber of Business and Industry, which has 12,000 member firms.

Chamber Vice President Maura Donley likened Mr. Rendell to the best-known character in the Charles Dickens classic, "A Christmas Carol."

"Reminiscent of Ebenezer Scrooge's dealings with Tiny Tim and the Cratchit family, the governor continues to show disinterest in the struggles facing Pennsylvania's job creators," she said.

Mr. Rendell has been governor since January 2003. Ms. Donley said that private companies and employers in the state "have been waiting three years for him to pay more than lip service to being pro-business, waiting for the governor to prove that he wants a business-friendly environment for the commonwealth."

She said many studies have shown that Pennsylvania "continues to lose ground to our competitor states" when it comes to helping companies increase jobs. She said the proposed tax cuts "represented a small but important step forward."

The bill would have made a slight reduction in the state's personal income tax rate, which applies not just to individuals but to how much tax many small businesses pay on their profits.

The bill, sponsored by Rep. Dave Reed, R-Indiana, would have cut the tax rate from the current 3.07 percent to 3.05 percent. The rate was raised to its present level on Jan. 1, 2004, up from the previous 2.8 percent.

While the proposed tax cut would have saved only $10 for someone earning $50,000 a year, business groups said it would have benefitted small companies, which employ thousands of Pennsylvanians.

They pay their state tax based on the personal income tax rate rather than the corporate net income rate of 9.99 percent.

The bill also would have lifted the current $2 million cap on the amount of losses a firm can carry forward from one year to another. Lifting the cap would have helped companies even out profits and losses from one year to the next and hold down their taxes.

"The high cost of doing business in Pennsylvania will remain, because Gov. Rendell vetoed a pro-jobs tax cut bill," complained Mr. Smith, a frequent critic of Mr. Rendell.

The bill passed the House in November on a 183-11 vote and the Senate Dec. 5 by 35-13.

Mr. Smith said the tax reduction would have complemented the ongoing phase-out of the Capital Stock and Franchise Tax, which is set to be reduced each year until it's eliminated in 2011.

"We were trying to let job creators know that Pennsylvania is open for business," he said. "The governor's veto sends the wrong message."

Kate Philips, Mr. Rendell's press secretary, said no one should be surprised by the veto.

"The governor has said all along he would run a pay-as-you-go government," she said.

In the 2006-07 fiscal year, which starts July 1, the tax cut would have meant a $53 million loss for state coffers. That loss would have increased to $163 million in 2007-08.

She said it's irresponsible budgeting to cut income without cutting expenses.

She said such important state programs as Head Start, which serves prekindergarten children, or other early childhood programs or library funding or Medicaid for lower income people would have faced serious cuts.

In a statement, Mr. Rendell said supporters of the tax cut "are more interested in their own pocketbooks and less interested in being financially responsible and taking care of critical human service needs."

Mr. Rendell defended his efforts on job creation, saying that because of his economic stimulus program and state funds for capital projects, the number of jobs in the state is at an all-time high.