UPDATE

HARRISBURG _ House and Senate leaders say they have “an agreement in concept” on key piece of legislation that allows for implementation of the state budget.

After days of back-and-forth, it appears House and Senate leaders have agreed to the creation of an “Independent Fiscal Office” that would serve as a counterweight to the Governor’s Budget Office.

Sen. Pat Browne, R-Lehigh, says the two sides agreed to sunset the new agency at the end of 2009-10 budget year. It would have to be re-implemented after that, Browne told us this afternoon. The office would not have a real impact on the budget until fiscal year 2011-12.

Browne says that mechanism gives lawmakers a chance to make sure the new agency is working to their satisfaction. That apparently resolved a dispute over language allowing the office, and not the governor, to certify the revenue estimate used to pay for the budget.

Both chambers have also signed off on language that sets a $60 million target on state forest leasing for natural gas exploration. The particulars of how that happens and how much acreage would be leased would be left up to the Department of Environmental Protection and the Department of Conservation and Natural Resources, Senate GOP spokesman Erik Arneson said this afternoon.

House Democrats say they plan to caucus on the agreement and then vote an amended bill out of Rules Committee this evening, with a floor vote to follow. Assuming the House agrees, the bill would come back to the Senate on concurrence and then be sent to the governor for his signature.

That’s critical because Rendell can’t sign the General Fund budget into law without the fiscal code, which provides destination accounts into which tax revenues are deposited, and later withdrawn from, to pay for elements of the general fund budget