Rendell: All state departments must cut spending by 2 percent

HARRISBURG -- Gov. Ed Rendell said today he is implementing a plan that calls for across-the-board departmental budget cuts of nearly 2 percent, which will mean laying off about 100 state workers, in an effort to save $212 million in the fiscal 2010-11 budget.

Mr. Rendell said he also is hoping the Legislature will soon adopt a new severance tax on natural gas pumped from areas of Marcellus Shale, which would generate $70 million in new revenue for the state budget.

Together, those two steps would fill a $282 million hole in the $28 billion budget that resulted when Congress didn't approve the full $850 million in extra Medicaid funding that state officials had hoped for.

Congress had originally talked of providing $23 billion nationally in additional Medicaid funds, but that was eventually reduced to $16 billion, so each state's allotment had to be cut.

Mr. Rendell said the 100 layoffs, while painful, are far less than the 12,000 that would have resulted if Congress hadn't approved about $600 million for Pennsylvania in additional Medicaid assistance. He said he didn't know yet which departments would lose workers but the layoffs would probably take effect by early September.

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are eliminated.