HARRISBURG -- Thousands of unionized state workers can breathe a little easier because Gov. Ed Rendell has decided not to use "rolling furloughs" as a way to ease the state's budget deficit.

At least not for the next 15 months.

For the last several weeks he has been negotiating with three state employee unions about whether to require their workers to take unpaid leaves or furloughs -- two days per month, up to a total of 29 days -- to help the state save $90 million on labor costs. It was part of his plan to deal with a projected $2.3 billion deficit by the end of June.

But Mr. Rendell yesterday unveiled a tentative agreement with union leaders on another option for saving more than twice as much money by temporarily reducing the state's contributions to an employee health benefit fund.

Mr. Rendell said the state would save $200 million over the next 15 months by reducing the contributions, which he said won't affect employees' health care benefits. He said the fund now has $248 million in reserves and will remain "fiscally sound" even with the proposed 20 percent reduction in state contributions.

The state will repay the fund in monthly installments, as early as September 2010, when officials hope the economy is better and more state tax revenue is rolling in.

The three affected unions are the American Federation of State, County and Municipal Employees, which represents 45,000 workers, at the Department of Transportation, Public Welfare and other agencies; the Service Employees International Union, which has 9,000 workers; and the United Food Commercial Workers, with 1,500 workers.

Union members still must ratify the tentative agreement. The administration is hoping other unions will join the deal.

David Fillman, executive director of AFSCME Council 13, said that given the current economic circumstances, this was a good deal for workers.

"We avoided rolling furloughs, we maintain a surplus in the health care fund, there is no reduction in health care benefits and there are no wage concessions," he said.

About 13,000 managers and other nonunion workers have had to make financial concessions due to the budget deficit. Mr. Rendell has canceled their raises for this year and next, saving $140 million.

State officials have been looking for ways to erase a $2.3 billion deficit. The red ink could, however, get even worse by the end of the current fiscal year June 30. April will be an important month in that regard because the state gets a large chunk of tax revenue this month. If the budget deficit significantly grows, layoffs of state employees aren't out of the question.