HARRISBURG -- Gov. Ed Rendell still thinks the Legislature will complete its work on a new state budget by next week, but he admitted today that he's getting worried.

"Sure I'm concerned, sure I'm worried," he said, in light of a dispute between Senate Republicans and the other three legislative caucuses over whether to create an "Independent Fiscal Office" to deal with annual state revenue projections and other fiscal issues.

Mr. Rendell said, "it's unfathomable" that this fiscal office dispute is holding up work on a $28 billion budget for fiscal 2010-11, which began Thursday.

"This is serious," he added.

He said he isn't directly involved in the dispute between the Senate GOP and the other three caucuses.

"I don't have a nickel in that dime," he quipped, meaning the dispute involves the legislative branch of government, while he heads the executive branch.

But if the dispute prevents work from being completed on bills for a new state fiscal code, a hospital assessment bill and a $600 million borrowing for construction projects, Mr. Rendell said he would be alarmed.

"I am relatively confident that sanity will prevail and we will get this (budget work) done in the next few days," he said.

Mr. Rendell is hoping to sign the budget and several related bills on Tuesday. He has to either sign or veto the budget within 10 days, meaning by July 10, and has said he'll veto the $28 billion spending package if all budget-related measures aren't ready for his signature. That could cause state employees to miss paychecks and social services agencies to be late getting state funds.

Senate Republican spokesman Erik Arneson said the new Independent Fiscal Office is needed "to take politics out of the revenue estimate." He compared it to the Congressional Budget Office, which is nonpartisan.

"A revenue estimate should be fact-based, not influenced by a governor's (or a legislature's) spending priorities," he said. "We want to open up information that is now only available to the executive branch, giving the Legislature and the public better ability to produce a good budget."

However, House Democratic spokesman Brett Marcy said the new office would cost at least $1.5 million a year and would expand the state bureaucracy, at a time when most departments have less money to spend.

Currently, each year state agencies give their budget requests only to the governor's budget office. The proposed legislation would require agencies to also give the information to the Independent Fiscal Office.

"Pennsylvania is currently one of only eight states where the Legislature doesn't receive the agency budget requests," he said.

Mr. Rendell said the idea to create this new office wasn't part of the budget discussion until a couple days ago. He didn't say if he supported or opposed the new fiscal office, saying he would have to examine the bill once it is passed.

But he said he won't support anything that tries to weaken the power of the governor's budget secretary to set state revenue estimates each June, just before a new budget is approved. He said that authority is established in the state constitution and shouldn't be changed.

"Under the law, the budget secretary (alone) certifies annual revenue estimates," he said. "There can't be more than one legal authority setting those estimates. You can't have a split authority."

Some Republican legislators think the governor's budget office has more personnel to establish revenue estimates for an upcoming year and would like to give the Legislature more expertise, although the Senate GOP insists the new fiscal office wouldn't be political.

Mr. Rendell also said he will oppose any efforts to link creation of the new fiscal office to enactment of a new tax on natural gas from Marcellus Shale. The Legislature has tentatively agreed to enact the new gas tax by Oct. 1.

Some House Democrats think the Senate GOP wants to work over the summer to create both the fiscal office and the new gas tax so they can both be enacted by Oct. 1.

But Mr. Rendell said there is no connection between the two issues. "We can't tie the Marcellus Shale tax to the fiscal office," he said.

Mr. Rendell said legislators should work through the holiday weekend if necessary to get all the budget bills to him by Tuesday.

"No one should leave here until all the legislation is resolved," he said.

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