HARRISBURG – On Wednesday Gov. Edward G. Rendell announced additional budget cuts and cost-saving measures to help balance the state budget as the national economic downturn continues to affect revenue collections.
“In light of our revenue shortfalls, we already cut 4.25 percent of our spending, instituted a hiring freeze and curtailed out-of-state travel,” Rendell said. “These steps saved $311 million. However, I believe we must take further action and today I am announcing another $128 million in cuts, which will bring the total we have in budgetary reserve to $439 million.
“The detailed list of budget reductions is still being finalized, but the cuts will be broad-based across a multitude of agencies and programs. I expect nearly 400 out of a total of 500 appropriations under my jurisdiction will be reduced.
“If the General Assembly and other independent agencies meet the goal I laid out in September of reducing their spending by 4.25 percent (an additional $36 million), we will have frozen $475 million in state spending this fiscal year.
In addition, Rendell announced a wage freeze for more than 13,600 non-union employees and directed 51 cabinet and executive officials to donate back, after state and federal taxes, the net amount of a 2.8 percent cost-of-living increase mandated by a 1995 law. The wage freeze will save $14.3 million through the end of this fiscal year.
“Today I pledge that I will donate the net amount, after deductions, of the cost-of-living increase back to the commonwealth. I have directed my cabinet to do the same,” the governor said. “We could not ask our employees to accept a wage freeze at the same time we would be accepting a COLA.”
“In addition, I am going to ask the unions to meet with me at the start of the new year to discuss options for reducing costs relating to our unionized employees.
“Everything is on the table for consideration and review. We have to balance our budgetary restraint measures with our obligation to provide quality public services to the citizens of the commonwealth.
“We don’t have a crystal ball, so we don’t know what to expect moving forward,” Governor Rendell said of the current weakness in the economy and the outlook for recovery.
In a letter today to the 13,600 employees affected by the wage freeze, Rendell said, “The decision to freeze your salary was a very difficult one. You often make other sacrifices for the betterment of the commonwealth and those we serve. It is that character which sets you apart as a leader and it is what makes me proud to serve with you as part of this administration. None of that changes the difficult fact that you are giving up an anticipated pay increase to help resolve our fiscal challenges. You have already been part of our efforts which have taken over $1.5 billion out of the cost of operating the government and we have redirected that money into programs that do so many good things for the citizens of the commonwealth. Thank you for all you do in the name of public service and for the sacrifice you are bearing on behalf of commonwealth citizens.”
Commending commonwealth employees for their hard work, Rendell said Pennsylvania is now saving $1.5 billion a year as a result of his efforts to enhance government services while improving efficiency and cutting waste. Among the measures taken:
· There are nearly 3,000 fewer commonwealth employees than in January 2003, which saved the commonwealth approximately $240 million last year;
· The commonwealth has saved $272 million by developing smarter purchasing policies;
· The commonwealth has reduced the size of the automobile fleet and is keeping vehicles longer, saving approximately $33 million;
· The Governor’s recent directive to halt the purchase of new commonwealth vehicles will save an estimated $40 million this year alone;
· The commonwealth has kept average annual employee health care cost increases to less than 3 percent over the past five years – far below the growth in private health care costs; and
· Adjustments announced last year to the Retired Employees Health Program will save $94 million a year.
The national economic downturn is affecting most states. During a meeting with President-elect Obama in Philadelphia on Tuesday, the National Governors Association announced that 41 states now face serious budget deficits.
Next week Rendell will meet with legislators to outline his plan to finish the 2008-09 fiscal year on June 30 with a balanced budget.