HARRISBURG -- A proposal for a 16 percent increase in the state income tax is dead because of strong opposition from Western Pennsylvania lawmakers, House Democratic leaders said yesterday.

The group of 20 or so conservative Democrats, called the Blue Dogs, "wanted us to take the PIT [personal income tax] increase off the table," said House Speaker Keith McCall, D-Carbon. "We have taken it off the table."

Rep. Nick Kotik, D-Robinson, held a powerful bargaining chip in the form of a budget amendment he had planned to introduce, an amendment that was drawing support from House Republicans yesterday. The amendment, which Gov. Ed Rendell had threatened to veto for lack of sufficient school funding, would have called for $27.5 billion in state spending for fiscal 2009-10. That compares to a $27.1 billion budget that Senate Republicans want and a $28.2 billion budget that Mr. Rendell wants.

But Mr. Kotik, leader of the Blue Dogs, withdrew the amendment in exchange for a promise from Democratic leaders that they would not pursue an increase in the state income tax, which the governor has been strongly advocating. The proposed increase would have raised the income tax rate to 3.57 percent from the current 3.07 percent for the next three years.

"My goal was to take the PIT increase off the table. I was looking for ways to do that," said Mr. Kotik, who was joined in opposition to the tax increase by numerous Western Pennsylvania Democrats, including Reps. Harry Readshaw of Carrick, Dom Costa of Stanton Heights, Bill Kortz of Dravosburg and Tony DeLuca of Penn Hills.

"In this economy, an increase in the income tax was not going to fly in our area," Mr. Readshaw said.

The Blue Dog Democrats, like all 203 members of the House and half the members of the Senate, have to run for re-election next year and didn't want an income-tax increase vote hanging over their heads. They also said that the recession has left many people unemployed or underemployed and not able to pay higher taxes.

House Republican leader Sam Smith of Punxsutawney said the income tax increase was very unpopular -- among voters and legislators, including many Democrats. And yet, he said yesterday, he's still not completely convinced the idea is dead with Democrats.

Ken Snyder, a spokesman for Mr. Rendell, said yesterday that if an income tax increase cannot be approved, Mr. Rendell would look for other sources of revenue to balance the budget.

"The governor, at every point in this process, has clearly stated that he is flexible and not wedded to the personal income tax. He continues to believe it is the fairest way to produce recurring revenue, but if someone else can produce other recurring revenue that adequately funds public education and ensures we're not back here in a year in the exact same situation, then he's open to it," Mr. Snyder said.

With the income tax increase dead, House leaders said remaining options include: postponing the planned phase-out of a tax on businesses' assets; eliminating some existing exemptions to the state sales tax (but not on food and clothing); increasing cigarette taxes and enacting new taxes on cigars and smokeless tobacco; enacting a new tax on natural gas; or legalizing table games in casinos and/or video poker in bars and taverns.

Mr. DeLuca claimed that eliminating the current sales tax exemption for advertising would bring in an additional $325 million a year for state coffers.

In another major move yesterday, the Democratic-controlled House rejected a last-ditch Republican effort to pass a $27.3 billion budget proposal. That leaves on the table a $27.1 billion, Senate-passed budget that Mr. Rendell has promised to sign only small parts of -- allowing for state workers to be paid and continuing basic state health and safety functions but funding little else in the way of state services.

If that $27.1 billion is given final House approval today and sent to the governor, it means lawmakers would still have to come back to negotiate a new full-year state budget. But the state's 77,000 employees -- including lawmakers themselves -- could soon collect back pay for payless workdays they've been working since July 1, when the fiscal year began.

"What we have done today, I believe, puts us back another month" in adopting a full state budget, said state Rep. Mario Civera, R-Delaware, ranking Republican on the Appropriations Committee.

The delay will cause serious problems for counties, school districts and social service agencies, which won't receive their state funding, said Mr. Civera. "Those will be the new budget hostages, instead of state workers," said Mr. Smith.

Also, Mr. McCall said another meeting between legislative leaders and Mr. Rendell on the budget will be held today at the governor's residence. So far the meetings have been fruitless.