HARRISBURG -- Gov. Ed Rendell said he'll sit down with legislative leaders Wednesday to solve the $250 million question.

That's the hole in the fiscal 2010-11 budget that must be filled because additional federal Medicaid funding isn't quite as much as Mr. Rendell and the Legislature were hoping to get.

The U.S. Congress is expected to provide $600 million in additional Medicaid funding for Pennsylvania instead of the $850 million that was included a month ago, when the current state budget was enacted. The U.S. House is to vote on the additional Medicaid money today. The Senate approved it last week.

Besides $16 billion for Medicaid nationwide, Congress is also approving $10 billion ($387 million for Pennsylvania) for school personnel.

Mr. Rendell had pushed for including in the current budget an extra $250 million for basic education spending this year, making a total of $5.8 billion for schools. Senate Republican leaders have suggested that extra $250 million as a place where some cuts could be made in order to erase the $250 million hole created by the lower-than-expected Medicaid funds.

Mr. Rendell, talking to reporters Monday, didn't rule out some lowering of the basic education money, but said he first wants to generate additional revenue for the state by ending the "vendor discount."

This is a $75 million item the state currently forfeits by giving a discount to retailers, including large ones such as Wal-Mart and Home Depot, for remitting their sales tax revenue on time to the state. Mr. Rendell said it makes no sense for the state to let retailers have that money when it could be used to avert layoffs.

Another budget item that might be trimmed is the $100 million or so in the budget for Walking Around Money, a name given to local pet projects, sometimes called "community revitalization grants," which are sponsored by many legislators. But WAMs are important to lawmakers, who are likely to resist giving up their projects.

Mr. Rendell said some of the cuts to the budget could cause layoffs of state employees, though he wasn't sure how many. Announcements on that could come early next week.

Mr. Rendell, a liberal Democrat from Philadelphia, didn't answer directly about an unconfirmed report that he might be interested in hosting a talk show on the conservative Fox news network, sort of a counterpart to the show hosted by conservative Joe Scarborough (an ex-Congressman) on MSNBC, a more liberal network.

"I'm looking for a job," Mr. Rendell quipped, since he leaves office in January. "I'm open to offers."

He said he sat at the Fox news table at a recent White House correspondents dinner so that may have started the rumors.

He said having a "progressive" such as himself on Fox -- which has conservative hosts such as Bill O'Reilly, Sean Hannity and Glenn Beck -- "might make some sense," but he'd had no discussions with any networks.

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