Governor Imposing Cuts

Gov. Edward Rendell last week announced he will impose a 4.25% spending reduction for state agencies to generate roughly $200 million of savings in Pennsylvania’s current $28 billion operating budget to help offset an anticipated decline in state revenues.

The governor said officials must suspend out-of-state travel and also imposed a hiring freeze, except in rare cases, in order for the commonwealth to adjust to a softening economy.

The belt-tightening measures will help the state address a weaker economy rather than closing any specific gap in the fiscal 2009 budget, which began July 1.

“Partly because of strategic, targeted investments in the past several years, Pennsylvania has a stronger economy than many other states, but the national economy is starting to affect us,” Rendell said in a press release.

“Our unemployment rate has been at or below the national average for 65 of the past 67 months, but our rate rose to 5.4% in July, and revenue collections through August are 3.3% less than we had projected,” he said. “Revenue collections for the first two weeks of September show that sluggish trend is continuing. To make sure the commonwealth’s budget remains in balance, we need to reduce spending now.”

While most departments will have to cut spending by 4.25%, public safety, health, and education agencies will have a lower rate to cut from their budgets as the governor said the state must maintain essential services.

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