HARRISBURG -- Forecasting the state's growing budget deficit is like trying to hit a fast-moving target, Gov. Ed Rendell says, but right now he's predicting the red ink will reach $1.6 billion when the fiscal year ends June 30.

The final revenue shortfall for the fiscal year that began July 1 could end up higher or lower than that, he told legislators yesterday, depending on what happens with the recession-wracked state and national economy over the next seven months.

As of Nov. 30, the state's budget deficit had reached $658 million, but that's certain to grow as state income, sales and corporate taxes continue to fall short of expectations.

"These are extraordinarily difficult times," he said. "We must get Pennsylvania back on track as fast as we can, in a responsible way."

At a public meeting with Senate and House leaders of both parties, Mr. Rendell outlined a six-point proposal to erase the projected deficit. For the first time, he proposed using half -- $375 million -- of the state's $750 million Rainy Day Fund.

Using money from the Rainy Day Fund would require legislative approval. While Democratic and Republican leaders pledged bipartisan cooperation with Democrat Rendell, it isn't known if they will agree with tapping that much of the emergency reserve fund. The state's revenue problems are almost certain to extend into fiscal 2009-10, which starts next July 1, and the Rainy Day Fund will be needed then also, lawmakers said.

Another key part of the Rendell plan is to seek $450 million in additional federal aid to pay for such things as jobless benefits, food stamps, medical assistance for lower-income and elderly people, and improvements to roads, bridges, mass transit, and water and sewer lines.

Over the weekend, President-elect Barack Obama unveiled a "use it or lose it" plan to help states pay for ready-to-go infrastructure projects, to make government buildings more energy efficient, and to expand the use of computers and Internet service at schools and hospitals.

Mr. Rendell endorsed that plan, although Mr. Obama hasn't said how much such aid will cost the feds or how much each state would get. Mr. Rendell said the state may get word on the federal funding in about five weeks. He actually wants $900 million in additional funds -- half this year and the other half in fiscal 2009-10.

A third major element of the Rendell proposal is cutting $464 million from the budgets of state agencies under his control. He's previously announced $439 million in spending cuts, and he bumped that up by another $25 million yesterday. He has imposed a state hiring freeze; eliminated 2.25 percent raises for 13,000 nonunion employees and managers; eliminated cost-of-living adjustments for others; and banned most out-of-state travel.

"We know there will be pain with these cuts," the governor said.

His plan also calls for state agencies not under his control -- such as the Legislature, attorney general, auditor general, state treasurer, Public Utility Commission and Pennsylvania Gaming Control Board -- to cut their budgets by a cumulative $36 million. Some have done so already and some haven't, he said.

Senate President Pro Tem Joe Scarnati, R-Jefferson, has proposed that the four House and Senate caucuses trim $75 million from their current $241 million "legislative reserve fund," a cushion of unspent money that has accumulated from previous budget years.

A fifth part of the Rendell plan calls for using $101 million in "lapses," a technical term for other funds that still remain unspent from previous-year state budgets.

The final piece of the pie would allocate $174 million in Marcellus shale revenue. This is money paid by companies for leasing underground shale areas of Pennsylvania, which hold large reserves of natural gas.

Republicans thanked Mr. Rendell for complying with their desire to have an open session on the budget problems.

"It's good for the public to understand the depth of the challenges we face," said Senate Republican leader Dominic Pileggi of Delaware County.

Mr. Rendell doesn't plan an increase in "broad-based taxes," such as sales or income taxes, to balance the current budget. He's hoping that such revenue measures won't be needed for the 2009-10 budget, which he said he'll propose "the first Tuesday in February, unless the Steelers or maybe the Eagles are in the Super Bowl. Then it'll be on Wednesday."

Legislative Republicans said they want no new taxes at all.