Gov. Edward G. Rendell announced Tuesday that the state’s budget deficit could grow to $1.6 billion, and that’s a conservative estimate.
“Based on revenue collections through November and current economic forecasts, we are projecting that revenues at the end of the current fiscal year will be below estimate by $1.6 billion,” the governor said at a public briefing at the mid-point of the state’s fiscal year.
“We need to take steps now to adjust our budget while preserving programs that will help speed our economic recovery and that provide a safety net to vulnerable Pennsylvanians during this difficult time,” Rendell said.
The governor announced a series of budget adjustments to make up for the deficit, including:
- $464 million from the already announced budget cuts and other cost-saving measures, including a wage freeze for more than 13,600 non-union employees and the elimination of this year’s cost-of-living adjustment for the governor and state cabinet members; a hiring freeze; and the curtailment of out-of-state travel;
- $36 million in budget cuts by the General Assembly and other independent agencies – reductions that have yet to be identified by those entities;
- $375 million from a portion of the commonwealth’s $750 million Rainy Day Fund. The remaining half will be saved to meet future economic challenges;
- $174 million in income from the Marcellus Shale natural gas drilling leases;
- $450 million in anticipated federal fiscal relief; and
- $101 million in unused funds left over in state accounts from prior-year budgets.
“I know the adjustments we have announced will be difficult for many Pennsylvanians. Tough choices and decisions have had to be made, but tougher ones may be on the horizon,” Rendell said.
“I am committed to ensuring fiscal responsibility in our budget while doing the least possible harm to important public services. We cannot predict the future, but we can and must respond to the information we have today.”
The governor’s announcement on Tuesday was the second round of budget cuts to come from Harrisburg. In the first round of cuts — announced in October — Temple was told to prepare for a 4.25 percent reduction to its state appropriation. That is equal to $7.46 million or 1 percent of the university’s education and general budget.
Because state revenues continued to decline, Temple prepared for a larger reduction, equal to 1.5 percent of our educational and general budget or $11.625 million.
The reductions came through a hiring freeze and tighter controls on out-of-state travel.
Now, with a second round of cuts announced by the governor, the situation is becoming more serious. Rendell’s latest cuts means Temple needs to take a 6 percent cut to its state appropriation, equal to about $11.4 million.
“It is now clear that making the more severe cuts this fall was the right action to take,” said Anthony Wagner, chief financial officer and senior vice president for finance and administration. “Even so, the immediate future does not look promising and additional cuts could be on the way.”
Wagner said the university’s leaders were reviewing the governor’s latest announcement and determining what new actions, if any, would be needed.
“While we anticipated the need for additional reductions, it is becoming increasingly clear that the state and national economies are in a very serious downturn,” said Wagner. “As a result, we need to be ready to take more serious actions if the economic situation worsens.”
As a state-related school, Temple receives a portion of its funding each year from the commonwealth. This money, combined with tuition, donations and other revenues, make up the majority of the university’s budget.
Wagner said university leaders would continue to carefully monitor the state’s economic health through the early months of the new year.
“Temple is a strong university and will be able to weather this economic storm if everyone is willing to pull together,” Wagner said. “There will be painful days ahead, but our common commitment to Temple’s mission will see us through.”