Things are getting tense in Harrisburg. So tense in fact that Gov. Rendell has begun to fantacize about gassing state legislators.

Gov. Rendell has signed the stop-gap budget so that 77,000 state workers continue to receive paychecks and now Pennsylvania’s budget standoff is now in it’s second act. Now lawmakers must go back to the drawing board and come up with a plan to close the state’s $3 billion deficit. How they’ll do that remains unclear.

Gov. Rendell and the Democrat majority in the House remain insistent upon raising taxes. Republicans control the Senate and remain opposed to any form of tax increase to address the state’s overspending problem; a reasonable position considering that Pennsylvanians have to work until this Friday just to pay off the annual cost of their government.

Now that legislative Democrats have taken Rendell’s 16% income tax hike off the table it is rumored that Dems will coalesce behind a sales tax hike or a severance tax increase on natural gas extraction. Click here for recent commentary from ATR on why a severance tax would be so bad.

ATR agrees with Senate Republicans that raising taxes right now is the worst thing that lawmakers could do for the state economy. ATR will continue to monitor negotiations

Stayed tuned for further updates on the protracted Pennsylvania budget fight.