HARRISBURG -- Gov. Ed Rendell said today he is implementing a plan that calls for across-the-board departmental budget cuts of nearly 2 percent, which will mean laying off about 100 state workers, in an effort to save $212 million in the fiscal 2010-11 budget.

Mr. Rendell said he also is hoping the Legislature will soon adopt a new severance tax on natural gas pumped from areas of Marcellus Shale, which would generate $70 million in new revenue for the state budget.

Together, those two steps would fill a $282 million hole in the $28 billion budget that resulted when Congress didn't approve the full $850 million in extra Medicaid funding that state officials had hoped for.

Congress had originally talked of providing $23 billion nationally in additional Medicaid funds, but that was eventually reduced to $16 billion, so each state's allotment had to be cut.

Mr. Rendell said the 100 layoffs, while painful, are far less than the 12,000 that would have resulted if Congress hadn't approved about $600 million for Pennsylvania in additional Medicaid assistance. He said he didn't know yet which departments would lose workers but the layoffs would probably take effect by early September.

One factor that limited the number of layoffs is that about 5,000 state workers have decided to retire this year, instead of the usual 3,000, he said.

However, if the Legislature doesn't enact, by Oct. 1, a shale tax producing $70 million in additional revenue, there could be more layoffs, he warned.

Under the revised budget plan, Mr. Rendell said, the state's 500 school districts will receive a total of $200 million in additional funds for basic education this school year. Letters will soon go out to each district specifying how much money each will get.

Mr. Rendell originally wanted to give $354 million in additional basic ed funds, but that was trimmed to $250 million and now the final figure is down to $200 million. He said he understands it is causing difficulties for school districts to do their budgets when the figure for state aid keeps changing.

Mr. Rendell said he rejected a Senate Republican request to eliminate the additional $200 million for schools and instead set that money aside for future pension costs. He said that if Senate Republicans are truly concerned about pension costs, they should approve a bill the House has already approved to reduce pension costs for future state and school district employees.

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