How much of a budget deficit is Pennsylvania facing?

Capitolwire.com is reporting that there is a top-secret memo from one of the four legislative caucuses estimating that Pennsylvania is facing a potential $2.5 billion budget deficit going into next year (non-subscribers can get a summary from John Micek). Obviously this would vastly exceed the $200 million Governor Rendell is planning to save.

The current revenue trend is well below the pace that resulted in the past two tax increases. Even State Senator Vince Fumo - who has never been known to show fiscal restraint with other people's money - has started to sound the alarm.

We have suggested numerous ways to cut the budget and save taxpayers, but, as we pointed out three weeks ago, the time for action is now, given that the General Assembly cannot take action again until January.