HARRISBURG -- Unlike the past several years, House Democratic leader Bill DeWeese thinks he might actually be able to attend this year's July 4 parade in Merrittsville, Fayette County.

But if he's to avoid being stuck at the Capitol, the Democrat-controlled House, the Republican-run Senate and Democratic Gov. Ed Rendell must settle their differences on several major issues and reach agreement on a 2008-09 state budget. And that's no slam dunk.

Mr. DeWeese has advised his House colleagues to "bring some extra undergarments" when they show up for long days of work this week.

The state fiscal year always begins July 1. Mr. Rendell has been governor since January 2003, and in none of his years have he and legislators settled a budget on time -- meaning by 11:59 p.m. on June 30.

And it may not happen this year either, which could lead to 25,000 workers who are deemed "non-essential to state health, safety and welfare" being temporarily furloughed without pay. That's what happened for one day last year (although they were later paid for that day once a budget was approved.)

But Mr. DeWeese, in an interview Friday, said he's guardedly optimistic that a budget agreement would only be one, two or three days late, so the 253 legislators can be back home on July 4.

If things go unexpectedly well over the next seven days, he said, "I haven't given up on the idea that a handshake [on the new budget] is possible by midnight on June 30," he said. "But if not, I still have confidence that our troops will be back home for the Fourth of July parade."

Not everyone is so confident. Privately, some legislators fear it could be mid-July before an agreement on a spending package for 2008-09 is reached.

One event that may pressure Mr. Rendell to reach a deal in early July is the upcoming National Governors Association meeting. It's set for July 11-14 in Philadelphia, where he lives and served as mayor in the 1990s. Some officials think it would be an embarrassment for him to still be haggling over a budget when his fellow governors begin pouring into his home town.

Another positive factor is that two contentious issues -- a House Democratic plan to expand health insurance to uninsured persons and Mr. Rendell's plan to lease the Pennsylvania Turnpike to a private group -- are off the table until legislators return in late September.

But that still leaves some difficult issues to resolve, such as agreeing on the precise amount that state spending should increase in 2008-09. It could range anywhere from 2.5 percent, a modest increase that's favored by many Republicans, to as much as 4.8 percent, favored by some House Democrats.

In February Mr. Rendell proposed a $28.3 billion budget for 2008-09, a 4.2 percent increase over the current year. Senate Republicans last week reduced that bottom line to $27.9 billion, but much debate remains.

Another thorny issue is how much education spending will increase. Mr. Rendell wants a $291 million increase over 2007-08, as the first step in implementing a recent state "costing-out" study that called for giving more funds for local school districts. The Senate GOP reduced the education increase by more than $100 million, so more talks are needed.

Another big issue is a $750 million capital bond issue that Mr. Rendell wants to pay for construction projects around the state. Conservatives will seek to reduce that to hold down the state's indebtedness.