HARRISBURG -- Once again, state officials are stumbling into a new fiscal year without having enacted a new state budget.

"We will be graded poorly by the people," said Rep. Mario Civera, R-Delaware County.

"This is a sad day for Pennsylvania," said freshman Sen. Kim Ward, R-Westmoreland.

Today is the first day of fiscal 2009-10, but Democratic Gov. Ed Rendell has been unable to resolve serious financial and philosophical differences with Republican legislative leaders over a new spending package of $27 billion to $28 billion.

Both sides blamed the other yesterday, with Mr. Rendell saying Republican senators want to cut too deeply into essential state services. GOP leaders countered that the tax increases he wants are unacceptable and that state expenditures must be trimmed to stay in line with declining revenues.

"It's unacceptable that a state budget won't be adopted on time for the seventh year in a row under Gov. Rendell," said Senate Republican Whip Jane Orie of McCandless.

Mr. Rendell is proposing a $28.8 billion budget for this year, which is significantly higher than the Republican proposal of $27.3 billion. Mr. Rendell wants to spend more on public education, economic development, prisons, state parks, libraries and other items than GOP legislators do.

But his budget plan calls for several new and higher taxes, headlined by a 16 percent increase in the personal income tax rate, which would rise to 3.57 percent from 3.07 percent. That increase has been assailed both by Republicans and by some Democrats, many of them from Western Pennsylvania.

Senate President Pro Tem Joe Scarnati, R-Jefferson, who also is the lieutenant governor, said 2009-10 spending must be less than it was in the just-ended fiscal 2008-09. The original spending number for 2008-09 was $28.2 billion, but Mr. Rendell trimmed it by $500 million a few months ago, putting it at a revised $27.7 billion.

While Mr. Rendell held budget talks yesterday with legislative leaders from both parties, they remained far apart.

"I can't predict when the budget will be resolved," said Senate Majority Leader Dominic Pileggi, R-Delaware County, "but I don't think we are anywhere close. This has the potential to go into August."

Mr. Scarnati said Republicans are firmly opposed to a personal income tax increase. He said it will be difficult to make progress until the governor takes that idea off the table. But Mr. Rendell said the state's budget deficit of $3.2 billion can't be erased without a an income tax increase, along with some higher tobacco taxes and a natural gas extraction tax. He also wants to use the state's $750 million Rainy Day Fund, which the GOP opposes.

Since Mr. Rendell became governor in 2003, there has never been a complete new budget adopted on time. He doesn't see that as a big deal, insisting that "it's more important to get the budget done right than to get it done on time." He said most state workers wouldn't miss a two-week paycheck until July 17.

To help employees over the hurdle, 10 Pennsylvania banks and credit unions are offering low- or no-interest loans or reduced interest rates on existing loans. Some programs are limited to existing customers or have eligibility requirements based on credit history. About 200 banks were asked to participate, and 10 responded, including FNB Bank and Citizens Bank, which operate in Pittsburgh.

"This is not a panacea and should not delay us from getting a workable budget done ... but many people, state employees included, live paycheck to paycheck," Mr. Rendell said.

He acknowledged that the loan availability removes pressure lawmakers would otherwise feel from state workers facing economic hardship through the budget impasse, but he added that it's important to take care of employees.

"Are we taking away one of the pressure points that helps lead to a settlement? Maybe, but I don't want our state employees to be pawns in some budget dance."