HARRISBURG -- The House and Senate could vote today on a $28.05 billion budget, and Gov. Ed Rendell says he's prepared to sign it.

Legislative leaders Tuesday reached an agreement on a plan that increases spending by 0.6 percent without adding any broad-based taxes. If the rank and file agree today, it would be the first time in eight years that a complete general fund budget had passed on time.

As part of the deal, leaders agreed to work in the fall on legislation to tax the extraction of natural gas from the Marcellus Shale region. They said they would enact legislation by Oct. 1 and begin collecting the tax on Jan. 1.

Details of the tax -- including the amount of revenue it would raise -- have not been negotiated yet. Mr. Rendell said that the budget was balanced even without the extraction tax. Revenue from it, he said, could be used to patch a gaping hole in next year's budget when federal stimulus money runs out.

While the proposed budget doesn't rely on revenue from the extraction tax, it does depend on receiving $850 million in federal medical assistance funds that Congress might not approve.

"There is a danger, there is no question" that the money won't come through, said Mr. Rendell, who plans to visit Washington today with other governors to lobby federal lawmakers. "Even though this is a good budget, there are storm clouds on the horizon."

If the funds don't come through, Mr. Rendell said he would meet with legislative leaders to decide which programs to cut. At the top of the list will be basic education funding, which gets a $250 million -- or 4 percent -- boost according to the deal negotiated.

That's shy of the $354 million increase Mr. Rendell wanted. Senate Republican leaders, meanwhile, wanted no increase.

The proposed budget also provides additional funding for economic development and job creation. Most other areas of the budget, meanwhile, are to be cut.

The agreement calls for cuts of 7 percent to 12 percent for libraries, state parks, the governor's office and the departments of agriculture, environmental protection, conservation and natural resources, and labor and industry.

Layoffs will be necessary, but the governor could not say how many or which positions.

If the federal medical assistance funds don't come through, the number of layoffs at all levels of government will be much higher, Mr. Rendell said.

"It's not a pretty picture," he said. Without that money, "the pain will be excessive."

The governor said Tuesday that he was disappointed the Legislature would not agree to increase the cigarette tax, add new taxes on cigars and smokeless tobacco, and close a loophole that allows business to avoid paying the corporate net income tax.

Those measures would have raised about $250 million a year -- money the governor says could help replace federal stimulus funds that dry up next year.

"We left money on the table," Mr. Rendell said.

He said he was confident lawmakers would approve the spending plan, but legislative leaders remained cautious.

"Until the members of the House and Senate sign off on this proposal, there is no deal," House Majority Leader Todd Eachus, D-Luzerne, said.

Senate Majority Leader Dominic Pileggi, R-Delaware, said, "I've been party to too many general agreements in principle that when they're reduced to writing, I anticipate problems pop up."

The Senate Appropriations Committee is expected to take up the bill this morning. Senate rules require a six-hour wait before the full chamber can vote.

House leaders say they will seek to waive a similar rule that requires a 24-hour waiting period between Senate action and a vote in their chamber.

Senate Appropriations Chairman Jake Corman, R-Centre, expects a smooth sail through the GOP-controlled Senate.

"Everyone saw [the agreement] tonight. There were no disagreements popping out," he said after a Republican caucus. "Everything is pretty locked down."

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