HARRISBURG - A top House Republican on Tuesday toned down the rhetoric pointing to a budget impasse, saying he was unwilling to let a disagreement on whether to privatize state liquor stores derail negotiations with the Wolf administration.

"Liquor can be pushed to the side, it can be taken off the table, as part of a final budget discussion," Majority Leader Dave Reed (R., Indiana) said. "It will not be an impediment to getting a budget done."

It wasn't clear if Reed's comments to reporters signaled a new division within his party's leadership. They came just hours after Gov. Wolf emerged from budget talks saying the GOP-controlled legislature must back off its insistence on liquor privatization and pension reform at the expense of more pressing budget items.

Wolf's spokesman, Jeff Sheridan, had accused House Speaker Mike Turzai (R., Allegheny) of stalling negotiations with an aggressive liquor privatization proposal. Turzai's office did not respond to requests for comment.

Reed said he and his Republican colleagues still plan on sending Wolf a liquor privatization plan - one he said could generate hundreds of millions of dollars annually. He also noted that if Wolf turned it down, he would lose out on much-needed revenue that could be dedicated to funding public schools, a priority for the governor.

He did not go into detail, but said the proposal would call for leasing the wholesale operation of the Liquor Control Board - an option that has not been floated in recent years as the legislature has examined the issue.

Reed also said the plan would give private retailers more options to sell wine and liquor, and slowly phase out the State Stores.

But he was clear that he does not want to see state government grind to a halt over liquor.

"I don't think that's in the best interest of the people of Pennsylvania," Reed said.

Earlier in the day, the governor told reporters he had asked Republicans who control both legislative chambers to seriously discuss the question of education funding and property tax cuts. Wolf also dismissed complaints from earlier in the week by GOP leaders that he is refusing to meet them halfway on issues important to them.

"We are making every effort to show good faith," the governor said, later adding, "We are going to continue to talk until I have a budget I can sign."

With the Tuesday night budget deadline approaching, the only thing both sides appear to agree on is the size of the projected deficit - $1.2 billion.

Turzai and other Republican leaders previously said liquor privatization and reining in the burgeoning cost of public employee pensions were central to any budget deal.

Republicans have proposed moving new employees into a 401(k)-style plan while requiring existing employees to pay more to maintain the benefits they have. Wolf has rejected that proposal, pushing instead for "modernizing" the state-run liquor system to pay for a proposed $3 billion in borrowing to refinance public school employee pension obligations.

The governor's budget would also raise the sales and personal income taxes, and use much of that money to finance property-tax reductions statewide. Wolf also wants to replace the state's impact fee on natural gas drillers with a higher tax to generate dollars for public schools.

Republicans have called the increases excessive, and contend they will hit taxpayers in their wallets and hurt one of the state's most promising industries.

More talks are scheduled this week. The Senate has also scheduled voting days this weekend.

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