HARRISBURG - Gov. Rendell yesterday ordered his cabinet to cut the proposed 2009-10 budget by an additional $500 million, warning that the economic situation was "very, very dire" and that difficult funding decisions must be made.

Rendell presented each department with a list of recommended cuts, but gave secretaries until Monday to come back with their own suggestions if they don't like his.

The governor's office would not release a detailed list of its suggested cuts, but it said the Departments of Education, Public Welfare, and Community and Economic Development would be hit hardest, yielding slightly more than $360 million of the $500 million. The state's projected budget deficit is $3.2 billion.

Rendell also wants to raise the state's personal income tax by 16.5 percent, from 3.07 percent to 3.57 percent, for three years to help deal with the effects of the recession.

"You didn't cause this problem, I didn't cause this problem, and the people of Pennsylvania surely didn't cause this problem," he told his cabinet yesterday. "A bunch of greedy Wall Street millionaires did, and all of us have to deal with it now and share in sacrificing."

The governor did pinpoint a few programs that would be affected by his cuts, including $2 million for county fairs and $14 million for mental-health and retardation programs.

Rendell also said there would be reductions totaling $212 million in education, including cuts to his Classrooms for the Future program, which puts computers in classrooms.

"Some of these cuts we've suggested are, for me, personally distasteful," he said.

But even with the $500 million in cuts, Rendell's bottom-line spending total for the budget remains roughly what it was when he introduced it in February: $28.9 billion.

That is because the administration expects more than $500 million in additional costs in the current budget and next year's, including $421 million required mostly to pay for caring for the poor and elderly.

That prompted high-ranking Republicans yesterday to ask: What is the administration really cutting?

"The net result is that his budget includes the same level of spending that was presented to us in February," Senate Majority Leader Dominic Pileggi (R., Delaware) said. "It wasn't acceptable then, and it's not acceptable now in June."

Pileggi and other Republican leaders also oppose an increase in the personal income tax, saying it would hurt working families during a recession.

Rendell countered yesterday that the increase would amount to $5 a week for a family earning $50,000. And he said four out of 10 Pennsylvanians, including nonworking seniors, would not pay the increase. (The state does not tax Social Security or pensions.)

"The burden that we are putting on Pennsylvanians will be short-lived, and although it is consequential, it is not an enormous burden," Rendell said.

He also said he believed a budget could be negotiated by the July 1 deadline. He asked that his top staff and cabinet secretaries work seven days a week until then.

"It means I will have to cancel some plans, and so will you," Rendell said. "But there is no reason why we can't get this done."

Contact staff writer Angela Couloumbis at 717-787-5934 or acouloumbis@phillynews.com.
Inquirer staff writer Amy Worden contributed to this report.