HARRISBURG -- It's official, but it's not pretty.
The state has finished the 2008-09 fiscal year with a budget deficit of $3.25 billion, state officials said today. Yesterday was the end of the fiscal year, and for weeks officials have been forecasting a deficit in the range of $3.2 billion. The state's total budget for the just-ended fiscal year was $27.7 billion.
Because of the ongoing recession, major state revenues, such as the sales tax, income tax and corporate taxes, are much lower than officials had forecast in July 2008, when the 2008-09 budget was adopted.
In February, Gov. Ed Rendell had outlined a plan to erase the 2008-09 deficit, which at that time was expected to be $2.3 billion. He wanted to use $1.1 billion in federal stimulus funds, mainly for medical assistance for lower-income people; plus $521 million from spending freezes, a travel ban and departmental savings he ordered in February; plus taking $175 million from the Legislature's "surplus'' or "slush fund'' account; plus $174 million from leases of land for natural gas exploration; and other items.
Also to be tapped under the Rendell plan is some or all of the state's $750 million Rainy Day Fund for economic emergencies, as well as part of the $700 million surplus in an account to pay doctors' medical malpractice premiums.
The exact sources of the funds to erase the 2008-09 deficit are still to be negotiated by Mr. Rendell and legislative leaders, as they also negotiate a new $28 billion or so state budget for the 2009-10 fiscal year, which began today.
