After nearly two hours of debate, the committee voted 20-14 along party lines to kill the Senate's $27.3 billion budget counterproposal, offered by Senate Republicans.
House Republicans assailed the committee vote as "gamesmanship." Democrats, who hold the majority, defended the action, saying they were under no obligation to consider the measure.
Rep. Mario Civera (R., Delaware), the ranking Republican on the committee, had strong words for Committee Chairman Rep. Dwight Evans (D., Phila.)
"What are we doing here?" asked an exasperated Civera. "You know [the bill] is not going to pass committee. . . . What are you prepared to do to start the budget process?"
Other Republicans argued for moving the bill to the House floor to try to reach an agreement ahead of the June 30 deadline - the end of the fiscal year.
But Evans said he viewed the debate as a step in the process that began when Rendell unveiled his $29 billion budget proposal in February. Evans defended his handling of the process so far, noting he had held 50 committee budget hearings around the state. He said that number was more than those conducted by any previous appropriations chairman in his 30 years in the legislature.
He also said he could not support forwarding a budget proposal that did not contain any of the governor's recommendations for plugging the budget gap this year and next, including dipping into the Rainy Day Fund, increasing taxes on cigarettes, and adding taxes on smokeless tobacco and natural-gas reserves.
"I do not believe Senate Bill 850 takes us in the right direction," said Evans, who, along with Rendell and other Democratic leaders, said a broad-based income-tax hike might be necessary to close the budget gaps. "I believe we have to have compromise."
The Senate's $27.3 billion plan is nearly 6 percent less than that proposed by Rendell and would use $2.7 billion in federal stimulus funds to compensate for some of the cuts. At the time it passed the Senate along party lines last month, the bill offered a balanced spending plan based on a deficit of around $2.9 billion. The latest projections, however, put the deficit at $3.2 billion.
Senate leaders have argued theirs is a fiscally prudent plan that does not rely on one-time revenue sources such as federal dollars or the Rainy Day Fund. Democrats said the GOP plan would cut too deeply into programs that help the most vulnerable and would force local tax hikes.