"I think you're going to see an overwhelming consensus on the legislation," said Sen. Jane Orie, R-McCandless, one of the architects of the package. "I believe this was the fairest and most equitable way to find a solution."

Orie said that "everyone contributes" under the plan.

But Sen. Jack Wagner, D-Beechview, came out swinging against the plan. It's "built on smoke and mirrors" and doesn't raise enough revenue for the city. It could prompt city officials to pursue an increase in Pittsburgh's income tax rate to raise money from suburbanites who work in the city, Wagner said.

"Once again, big business has pretty much dictated the agenda. It significantly hurts small business," Wagner said.

"It stinks," said Denise Gaynor, who owns two Downtown restaurants, the Liberty Tavern and the Tonic Bar and Grill. "I was hopeful that we would all be taxed fair. It's ridiculous."

Eitan Solomon, owner of Prime Gear, a Downtown retailer, said he knows "the basic line: We're probably going to pay more.

"It's just going to be two separate taxes," he added, referring to the business privilege and payroll taxes.

The business privilege tax would be levied at one-third of its current 6-mill level for two years and would be eliminated by 2009, at the latest.

"The business privilege tax is extended out for five whole years," said Wagner. "In my opinion, this will chase (non-exempt) business out of the city and not make for a better business climate."

"It's a Republican proposal," Wagner said. Republicans control the Senate.

The Senate would insert the Pittsburgh package into three House-approved bills pending in the upper chamber. Two House bills deal with local government taxation and contracts. The third requires school districts to develop written polices for student use of asthma inhalers.

If the Senate approves the three House bills with the Pittsburgh amendments, they will go back to the House for yes or no votes -- meaning no opportunity for changes.

Stephen Miskin, spokesman for House Majority Leader Sam Smith, R-Punxsutawney, said he's "not convinced there's an agreement. (But) we are in the same ballpark on fixing things."

The Senate legislation is not an identical twin for the recommendations of the five-member state oversight board set up by the Legislature in February to manage Pittsburgh's long-term finances.

The oversight board on Nov. 12 recommended an annual $144 occupational tax, a 0.55 percent payroll tax and elimination of the business privilege and mercantile taxes.

Key area lawmakers said they couldn't muster support for more than a $52 occupational tax. Thus, they were staring at a revenue gap of more than $22 million, meaning the city still would be in the red next year.

Part of the revenue can be made up by phasing out the business privilege tax, rather than eliminating it immediately.

Oversight board member David O'Loughlin said the Legislature is sending the wrong message by approving a new payroll tax without fully eliminating the business privilege tax.

"That just makes no sense to us," O'Loughlin said. "If you look at the business privilege tax, it's a bad tax. So eliminate it. The big corporations are still not paying the business privilege tax. ... Where is the fairness in that?"

The business privilege tax is set at 6 mills of annual gross receipts ($6 in tax on each $1,000 of gross receipts). At 6 mills, the tax would generate $43.6 million. At 2 mills, it would generate $14.5 million.

Republican lawmakers chose the phase-out after their attempt to get state grants for the city were rebuffed earlier this week by Budget Secretary Michael Masch.

Bailout bill would cut, boost and shift taxes

The state Senate was set to consider legislation early today to give Pittsburgh new and increased taxing authority. Here are the main points of the bill: