Less than three months after signing a record $28.3 billion General Fund budget that critics said would sink the state into red ink, Gov. Ed Rendell has ordered a series of measures to prevent a fiscal collapse.
Rendell ordered most state agencies to reduce spending by 4.25 percent and eliminate all out-of-state travel. He also imposed a hiring freeze, leaving about 5,000 vacant state jobs unfilled. State agencies that provide public safety, health and education services will have to make smaller cuts, Rendell said.
The cost-cutting measures are expected to save the state about $200 million by the end of the current fiscal year, Rendell said.
The fiscal year runs from July 1, 2008, to June 30, 2009. The state started noticing problems almost as soon as the fiscal year began. August tax collection revenues fell short of projections by $117 million. (The state actually missed its revenue projections in three of the last six months.) With the national economy in a downturn, the state could running in the red for months.
Critics warned that the state would run a deficit of up to $1 billion for the 2008-09 fiscal year, but the Legislature overwhelmingly approved Rendell's budget and the governor signed the massive spending plan in July. (Only 33 lawmakers -- 32 Republicans and 1 Democrat -- in the 253-member General Assembly voted against Rendell's bloated budget.)
After the budget was passed, one leading newspaper, The Pittsburgh Tribune-Review, editorialized that every lawmaker who supported the spending plan should be thrown out of office in November.
State Rep. Sam Rohrer wrote an op-ed column in July criticizing the Rendell budget: 'Rendell-a-nomics' will lead to massive tax hike next year Also check out this July 3 post: Surprise: Pa. facing $1B budget deficit and this post from July 5: Questions remain about PA budget
Don't be surprised if Rendell comes back asking for a tax hike after the November election.
Read more about Rendell's about-face on state spending at the link below.
PA Governor Rendell Announces Plan to Maintain Balanced Budget Despite National Economic Slowdown