Facing still sluggish economic conditions, Gov. Rendell has ordered additional spending cuts, a spending freeze and will tap unspent funds in the budget to help patch an end-of-the-year budget hole.

At a news conference this morning Rendell said without the cuts the state would end the fiscal year with a $450 million shortfall.

He said the cuts are needed to keep the current budget in balance as a result of a continuing decline in state revenues caused by a slow national economic recovery.

The revenue shortfall for the first five months of the fiscal year was $217 million.

Rendell has ordered a freeze of $170 million, recoup $50 million from prior-year unspent funds and will plan to draw $230 million from a year-end surplus originally projected at $354 million. That will leave $124 million surplus as a cushion, he said.

"In developing the current budget, we were very conservative in setting our revenue estimates and our spending levels. The wisdom of that course is now apparent, with the national economic recovery too weak to produce improvement in state revenues," Rendell said. "Pennsylvania will continue to restrain spending in response to economic uncertainty."

Rendell said although there were positive signs in the economy - such as an uptick in November retail sales - the overall picture "continues to worsen."

Rendell urged the General Assembly to complete work  on gaming legislation that will toss $250 million to the state kitty. He said without the gambling funds, more state layoffs would be "inevitable." In the past year the state had to lay off 721 employees under the governor's jurisdiction and 60 others from the Treasury Department.

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