In a meeting with state labor unions this week, Gov. Rendell gave formal notice of employee furloughs that could start in 30 days saying as many as 2,000 state workers (about 1 percent of the state work force) may be furloughed or have reduced work hours.

Late Friday, in another preview of his budget, Gov. Rendell said in an interview he would be proposing an increase in the tax on cigarettes by 10 cents that would general $50 million a year, a tax on smokeless tobacco and cigars to generate $50 million annually and a tax on production of natural gas from the Marcellus Shale formation to generate $150 million a year. There was no explanation of what the Marcellus Shale funds would be used for. (See newsclip.)

Gov. Rendell already used $174 million in lease payments received by the Department of Conservation and Natural Resources to put towards this year's deficit. (12/15/08 Pa Environment Digest)

The Governor also renewed his request to have the House and Senate dedicate $200 million from its own legislative accounts to dealing with the deficit. He increased his request from $175 million last week.

House Republican Leadership, for their part, charged the Governor with holding back $200 million in spending for his own purposes.

The state also hopes to get about $7.6 billion from the federal stimulus package being considered in Congress, the Governor said-- $4 billion for health care, $2.4 billion for eduction and $1.2 billion for infrastructure.

At the same time House Majority Appropriations Chair Dwight Evans (D-Philadelphia) said the Commonwealth really faces a total deficit of $5.6 billion this fiscal year and next based on revenue shortfalls and increased medical assistance and other costs that increase during an economic recession. (click here for Rep. Evan's Budget Briefing)

Meanwhile conservative House Republicans were staking out their fiscal territory in a press conference this week saying the answer to the state's budget problems is to cut spending and rollback the personal income tax.

And 20 major business associations representing nearly all of Pennsylvania 5 million workers told legislators this week the state cannot tax its way out of its budget problems.

The Governor's budget address is February 4 at 10:30 and he began this week promising "universal (budget) pain."

NewsClips: House Dem Budget Leader Outlines $5.6 Billion Budget Problem

House GOP Says Rendell Sitting On Millions

Rendell May Cut Payroll By 2,000

1/30/2009