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Budget Briefing Shows $450 Million Budget Deficit, 1,000 More Layoffs Threatened
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At the beginning of this week, Gov. Rendell said an additional $170 million in spending cuts were needed to keep the current budget in balance as a result of a continuing decline in state revenues.

By the end of the week, when the House and Senate failed to pass legislation authorizing table games as Pennsylvania's casinos, the Governor said an additional cut of $250 million would be needed to balance the budget resulting in the layoff of at least 1,000 state workers if the General Assembly does not act on table games by January 8.

He said an additional cut of $250 million was needed even though in his earlier announcement he said the fiscal year would end with a $124 million surplus.

First
$170 Million In Cuts

Without additional cuts, the administration projects a revenue shortfall of $450 million when the current budget year ends June 30. That amount would represent 1.5 percent of estimated General Fund revenues. The revenue shortfall for the first five months of the fiscal year was $217 million.

To address the projected shortfall, Gov. Rendell has directed a freeze of $170 million, which is a less than one percent reduction in state expenditures. The state will also recoup $50 million from prior-year unspent funds and will plan to draw $230 million from a year-end surplus originally projected at $354 million.

"That will leave $124 million to serve as a cushion against further erosion of finances."

"In developing the current budget, we were very conservative in setting our revenue estimates and our spending levels. The wisdom of that course is now apparent, with the national economic recovery too weak to produce improvement in state revenues," Gov. Rendell said. "Pennsylvania will continue to restrain spending in response to economic uncertainty."

Mid-Year Budget Brief
 PowerPoint is available online.

$250 Million More Cuts

At a press conference Thursday, Gov. Rendell said the failure of the House and Senate to complete work on a table games means $250 million more in cuts is needed to balance the budget and the layoff of at least 1,000 state employees.

The Governor said if the General Assembly does not pass table games by January 8, he will be forced to cut another $250 million from the budget which will come out of General Government Operations and descretionary grant programs. That's the amount table games were projected to contribute to the budget.

The Governor said the projected cuts to General Government line items will require the layoff of at least 1,000 state employees. He gave no details on which state agencies would be affected.
He said $250 million in cuts were needed even though earlier in the week he said the fiscal year would end with a $124 million surplus.

The House and Senate are scheduled to return for the beginning of session next year on January 5. The House has scheduled voting days for January 5, 6 and 7. The Senate is not expected to return to voting session until the week of January 25.

12/21/2009

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