The Tribune Democrat, Johnstown, PA

December 10, 2009

Governor warns of more layoffs as state revenues lag

By MARC LEVY

HARRISBURG — Deteriorating state tax collections may mean more program cuts and layoffs in state government, regardless of whether the Legislature authorizes an expansion of legalized casino gambling to raise more revenue, Gov. Ed Rendell said Wednesday.

The House of Representatives was scheduled Thursday to debate a measure to legalize table games at the state’s slot-machine casinos.

Democratic leaders adjourned an unusually long Wednesday night session after they were unable to plow through Republican opposition to reach a preliminary vote. The legislation would still require a final House vote and Senate approval before it could become law.

Legalizing casino table games is a key piece of October’s state budget agreement that resolved a multibillion-dollar, recession-driven shortfall.

However, tax collections have continued to fall short of the state’s lowered revenue expectations and the House and Senate have struggled since then to agree on the details of an actual gambling bill.

“I never thought that we wouldn’t have a table games bill to my desk for a signature by” now, Rendell told reporters at a news conference. “When we did the budget deal I never would have thought that and now I’m beginning to question whether we’re going to get a table games bill any time during this fiscal year.”

A table games bill was supposed to deliver about $320 million to the state treasury over the next two years.

To ensure that the state’s spending does not outgrow its projected revenues beyond this year, Rendell and House Democrats are holding up about $675 million in discretionary money for Penn State, Temple and Pitt until a table games bill passes.

The holdup in subsidies has prompted the three universities to threaten second-semester tuition increases for more than 150,000 students, while Republicans insist that the state’s existing revenues can support the extra spending.

But Rendell, a Democrat, said Wednesday that, without more gambling revenue, the state cannot afford all universities’ money this year because of lagging tax collections.

Rendell said he expects to make a decision by Jan. 1 on what kinds of further cuts and layoffs are necessary, regardless of whether or not the Legislature approves table games legislation.

“We may have to deal with that just on our shortfall in revenue,” Rendell said.

As of Dec. 1, the state’s tax collections were lagging projections by $217 million, or 2 percent below expectations.

The Rendell administration already has laid off more than 760 employees this year, or about 1 percent of the state work force, because of spending cuts necessary to balance the budget.