Pennsylvania faces a difficult financial situation in the months ahead as the national economy remains in recession, Sen. Jay Costa (D-Forest Hills) said. Costa is encouraged, however, by the prudent actions of the Rendell Administration, and by the spirit of cooperation among lawmakers of both parties.

Costa was among 10 legislative leaders who shared the stage with Gov. Ed Rendell Tuesday at the State Museum auditorium as the governor, during his annual mid-year briefing, predicted a revenue shortfall of $1.6 billion by the end of the 2008-09 fiscal year in June. Rendell also
outlined the steps he is proposing to balance the state budget.

‘The governor deserves credit thus far for the way he has handled this economic crisis,” said Costa, who was newly chosen last month to the influential position of Democratic Senate Appropriations Committee chairman. “He has been forced to make some painful budget cuts, but he has done so in a way that I believe has spread the burden evenly and

“During his first six years in office, Governor Rendell has also made strategic investments in our economy and engaged in sound fiscal management practices that have left us in much better shape than most other states,” Costa added.

While painting a sobering state budget picture, Rendell also noted that 41 states face potential deficits, some of them billions of dollars greater than Pennsylvania’s. Our state’s October unemployment rate of 5.8 percent, while climbing, is also better than the national 6.7
percent jobless rate announced last week.

Rendell noted that he has already trimmed $500 million from this year’s budget, and anticipates another round of $101 million in cuts. He expects to close the remainder of the gap by using half of the $750 million now in the Rainy Day Fund, or $375 million, another $174
million from natural gas drilling royalties for the Marcellus Shale, plus another $450 million in assistance that Pennsylvania will receive through the federal government’s next stimulus package.

The administration has instituted a hiring freeze, banned out of state travel, and asked more than 13,000 non-union workers to forego scheduled salary increases.

“I believe we are in a good position to balance this year’s budget,” Costa said. “With economists predicting continued hard times, next year’s budget is going to present an even greater challenge. It is likely that we are going to have to make additional cuts. At the same time, we have to keep in mind that more people are now relying on the state for safety net services. We must also remember the importance of investing our resources in ways that will create jobs.”

Costa was pleased by the spirit of bipartisan cooperation that marked the briefing.

“I sensed a genuine feeling among leaders from both political parties that we are all in this together. I’m looking forward to working with the administration and with legislators on the Republican side of the aisle to guide us through this bleak economic period with the minimum
amount of suffering possible for Pennsylvania workers and their families,” Costa said.