The state budget accord reached by Democratic Gov. Ed Rendell and Senate Republicans Monday advances the governor's ambitious second-term agenda, but now he has to figure out how to pay for it.

While Rendell's many proposals still have a pulse, the governor did not get everything he wanted.

And experts agree it's going to take some financial and political creativity to finance Rendell's proposals.

Senate Republicans rejected all of Rendell's seven proposed new taxes or tax increases. The tax proposals were left out of the agreement Monday and are off the table for the foreseeable future.

"We went seven for seven," said Erik Arneson, communications and policy director for Senate Majority Leader Dominic Pileggi. "No new taxes and no new revenues. … We wanted to control spending and bring it back to a reasonable level. We're certainly on the right track."

Rendell had to make some concessions to get his major proposals through the negotiations, Rendell spokesman Chuck Ardo said.

"He understands he is just part of the legislative process and that they, the Legislature, disagreed" about how to pay for his proposals, Ardo said Tuesday. "He feels (as) though he is well on his way to achieving most" of his agenda.

Harrisburg observers said Monday Rendell has two to three years to bring his second-term agenda to fruition.

"Whatever you think of the governor's proposals, he's put the ball in play, and there's likely something to happen," said Steve Peterson, director of the School of Public Affairs at Penn State-Harrisburg.

And to be successful, they say, Rendell can't hope to raise money to pay for his proposals by pitching new taxes.

"He's going to have to find money that doesn't even remotely look like a tax," said G. Terry Madonna, director of Franklin & Marshall College's Center for Politics & Public Affairs. "He won't get that through the Republican Senate."

Here's what the future holds for Rendell's second-term agenda:

• Alternative Energy Development.

Sources said Rendell's idea to add a $5.40-a-year surcharge to electricity bills to pay for development of alternative energy sources was one reason budget negotiations took so long to finish.

Rendell dropped the idea, but Senate Republicans agreed to hold a special session of the Legislature Sept. 17 to look at the proposed energy policy.

The two sides agreed to dedicate about $60 million annually in existing revenue to pay for Rendell's proposal, but it's not clear where the money will come from.

That likely will be a topic of discussion during the special session.

"They have identified at least one funding stream, but they are reviewing their options to see if there are others," Ardo said.

Both sides have in recent weeks spoken about a need to find a way to keep energy costs in check because government caps on electric costs will end in 2010. They predict rate hikes for residents and businesses likely will follow.

• Mass Transit and Roadway Improvements.

Both sides agreed to dedicate about $945 million annually for 10 years. The money will come from hikes in Pennsylvania Turnpike tolls, potential bond financing by the Pennsylvania Turnpike Commission and adding tolls to I-80, which runs across northern Pennsylvania.

Rendell's proposal to lease the turnpike to a private company is off the table, Arneson said.

• Health Care Reform.

Gone are Rendell's proposals to increase the cigarette tax, create a new tax on other tobacco products such as cigars and impose a payroll tax on small businesses that don't provide health care to their employees.

The revenue would have gone to pay for health care initiatives like government-sponsored coverage for Pennsylvania's 900,000 uninsured residents. That idea no longer appears to be part of the discussion.

However, four items on Rendell's health care reform checklist survived the budget negotiations: a ban on smoking in public places, increased regulations and safety standards for assisted-living facilities, legislation to reduce hospital-acquired infections, and a series of bills that would expand the scope of practice for some health care professionals like nurse practitioners.

The budget could be approved by the Legislature as early as Saturday, Arneson said. The language has to be written and examined by legislative leaders before rank-and-file members vote on it.

"There's a lot of work ahead," he said. "We have a long way to go on this."

Despite Rendell's concessions, Peterson said the governor did manage to successfully fight for most of his proposals.

"I can't imagine that in September it will be all sweetness and light" (between Rendell and legislative Republicans), Peterson said, "but these are agenda items now, and during the next two or three years" it will come to dominate debates in Harrisburg.

E-mail: dpidgeon@lnpnews.com