Friday, August 20, 2010

Plan to Close Remaining State Budget Deficit

With FMAP funding being less than what the state had budgeted for, a $282 million hole needs to closing. The Governor has a two-part plan.

The first part includes across-the-board cuts in departmental spending, including the layoff of 100 state workers by early September. The Governor expects to save $212 million by making a 1.9 percent cut in the budgets of dozens of agencies. In addition, he is urging the General Assembly, independent agencies, and state courts to cut their 2010-11 spending by the same amount.

The second part includes the enactment of a new severance tax on the natural gas being pumped from Marcellus Shale. It is anticipated that this would raise $70 million in new revenue from that levy.

If the tax is not enacted by early October or if agencies and the legislature do not trim their budgets, the additional layoffs may be necessary.

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