Governor Raises Budget Deficit Estimate to $2.3 Billion, More Cuts, Layoffs Coming

Gov. Rendell today said his latest estimate of the state budget shortfall for the current fiscal year is $2.3 billion, $400 million more than his last estimate, and that layoffs or unpaid furloughs may be part of his next budget proposal.
At the same time the Department of Labor and Industry reported Pennsylvania lost 27,100 jobs during December.
The Governor also changed the date of his budget address to February 4.
He reported he now expects the Obama Administration to provide $2 billion to $4 billion in federal aid as part of the planned federal stimulus package that will help plug the holes in the state's budget over the next three years. The Governor said just last month he expected $450 million in federal aid this year and next fiscal year.
Gov. Rendell called on legislative leaders to help deal with the deficit by returning $175 million from their legislative accounts which a recent audit shows has $220 million.
This fiscal year alone, environmental funding has been cut $207.4 million to help with deal with the budget deficit, the single largest cut in any state programs. In the last seven years, $784 million in environmental funding has been used to balance the budget or given to programs which could not get funding on their own. (12/29/08 Pa Environment Digest)
While Gov. Rendell said he was reluctant to propose a general tax increase, he said it was likely he would propose a tax on production from natural gas drilling in the Marcellus Shale formation. He did not provide any details of how much the tax would be or how the funding would be spent.
A number of environmental groups, including recently the PA Land Trust Association, said revenues from Marcellus Shale drilling should be used to help build for the future, not pay for today's expenses. (12/22/08 Pa Environment Digest)
Since these dollars would be generated in rural and economically challenged parts of the Commonwealth, many legislators want a significant portion of these revenues to be returned to those areas to support county and local governments, rebuild infrastructure and fund other local improvements.
While a new tax on production from Marcellus Shale natural gas wells will not generate a substantial amount of revenue in the immediate future, projects are it could generate hundreds of millions of dollars annually. The decisions made today about where to spend those funds will set a precedent for the future.
The General Assembly and the Governor also have other potential sources of funding available to deal with the budget, including $750 million in the MCARE Fund to pay medical malpractice insurance premiums for doctors and $375 million of the state's Rainy Day Fund.
NewsClips: Rendell Promises Job Cuts As State Finances Worsen
PA Loses 27,000 Jobs In December, Unemployment Climbs
Rendell Warns Of Layoffs As State Deficit Grows
Rendell Calls For Additional Budget Cuts As Deficit Grows