Rendell orders spending cuts, hiring freeze

In what was seen as a preemptive strike in the face of a weakening economy, Gov. Rendell yesterday ordered an array of austerity measures aimed at saving $200 million from this year's state budget.

Rendell put into effect an immediate hiring freeze and a ban on all out-of-state travel by state workers and officials. He directed cabinet secretaries to trim their budgets by 4.25 percent but stressed that spending on public safety, health, social services and education would not be affected.

Rendell said the moves were needed to maintain a balanced budget as the weakening national economy starts to affect Pennsylvania. Money saved will be placed into a reserve fund, he said.

"To make sure the commonwealth's budget remains in balance, we need to reduce spending now," Rendell said.

The hiring freeze will leave about 5,000 vacant state jobs unfilled, said Rendell. The travel ban applies to state employees, board members and commissioners.

David R. Fillman, executive director of Council 13 of the American Federation of State, County and Municipal Employees, which represents some state workers, said: "We're pleased that the governor is looking forward, to try to put some type of surplus in place. We do want to see what kind of a hiring freeze that is, and what type of positions would be frozen."

Fillman pointed out that Rendell's order did not call for layoffs, as has happened in other states that are facing economic stresses.

Rendell's order was not meant to fill a gap in the $28 billion state budget, but was a precaution to ensure that the state does not incur a deficit for the 2008-09 fiscal year, a spokesman said.

The announcement of the tightening moves came in a statement released late yesterday by the Governor's Office, and followed two days of volatility in the stock market and uncertainty on Wall Street.

Pennsylvania's unemployment rate rose to 5.4 percent in July, and revenue collections through August are 3.3 percent below projections.

That sluggish trend is continuing, based on collections for the first two weeks of September, Rendell said.

The current budget draws heavily on one-time dollars from tapped surpluses and relies on the state's postponing certain payments. Senate officials in July projected that a $1 billion deficit could pile up in the next 12 months and force additional cuts or tax increases.

"I know these changes will make it harder for our agencies to do the excellent work they do each day for the citizens of Pennsylvania, and they will place an even greater burden on our dedicated commonwealth workforce," Rendell said in the statement, "but I am asking all commonwealth employees to pull together during this difficult time. We are making these adjustments to safeguard the commonwealth's financial stability in the coming months."

According to Rendell's release, 13 other states are reporting new budget shortfalls just two months after enacting budgets.