HARRISBURG - Tom Corbett takes the oath of office Tuesday as Pennsylvania's 46th governor with an ambitious agenda on his plate and a daunting deficit on the horizon.

Corbett, a Republican and the outgoing attorney general, swept into office on a wave of anti-incumbent, anti-Obama sentiment, promising to hold the line on taxes and slash government spending.

But the fiscal damage wrought by the recession and the end of federal stimulus funds - together with what Republicans call irresponsible spending by retiring Gov. Rendell - have pushed the state's budget deficit toward $5 billion.

While workers clean up the confetti from the inaugural ball at the Farm show on Wednesday morning, Corbett and his team (which was still five cabinet secretaries short over the weekend) will be hard at work scrutinizing every item in the state budget to find ways to cut.

"The first issue, the biggest issue, is the budget," said Corbett's spokesman, Kevin Harley. "There needs to be a balanced budget, without raising taxes, and shrinking the size of state government."

Harley has said Corbett may be open to discussing targeted fees for gas drillers operating in the booming Marcellus Shale to help cover costs to municipalities for environmental and highway damage. He repeatedly said in his fall campaign that he would not impose taxes or fees on drillers.

Rendell has said he thinks it will be difficult, if not impossible, for Corbett to fulfill his across-the-board no-new-tax pledge. Even his ally in the state Senate, Majority Leader Dominic Pileggi (R., Delaware), questions whether Corbett can balance the budget on spending cuts alone.

Two of Corbett's top agenda items will put him on a collision course with two of the most powerful unions - those representing teachers and employees at state liquor stores.

Pileggi has signaled the Senate's commitment to move forward on one of Corbett's chief campaign promise: establishing school vouchers that would allow lower-income families to send children in failing school districts to private schools.

"It's time to put students first, parents second, and teachers third," Harley said. "No more are teachers first."

Harley said Corbett's administration would look closely at regulatory and legal changes. He said businesses that conduct operations across Pennsylvania report that state agencies, particularly the Department of Environment Protection and PennDot, apply regulations differently in different regions of Pennsylvania.

"We want to make sure they are applied fairly across the state," he said.

Harley also said Corbett would push to advance a version of the Fair Share Act, vetoed by Rendell, which would limit damage awards in lawsuits.

"I think the most important thing we can do initially is show businesses that we are a competitive state and that the trial lawyers do not run the state," he said. Corbett said he would look at reducing the state vehicle fleet and trying to eliminate fraud and abuse in state agencies.

And Corbett has vowed to sell the state liquor stores, a goal that has eluded two previous governors who lost their battle with state employee unions and liquor-control forces.

"It's ridiculous in the second decade of the 21st century that we would have this Soviet-style monopoly on liquor," Harley said.

Corbett has a key ally in the legislature to privatize the State Stores. House Majority Leader Mike Turzai (R., Allegheny) has drafted a bill that would do just that.

Tom Corbett's Inauguration Day

Tuesday, Jan. 18

8:30 a.m. Corbett attends Mass, 8:30 a.m. at St. Patrick Cathedral, 212 State St., Harrisburg.

10:20 a.m. Inaugural ceremony for Lt. Gov. Jim Cawley. Senate Chamber, the Capitol.

11:30 a.m. Inaugural ceremony for Gov. Tom Corbett outside the Capitol's East Wing. Admission is free.

7:30 p.m. Inaugural ball, Pennsylvania Farm Show Complex and Expo Center, 2300 N. Cameron St., Harrisburg. Tickets $150 per person.