It could be worse, I guess. Maybe the governors of California or New York would love to have a budget deficit of just $2 billion.

But this is Pennsylvania, where the state Constitution requires a balanced budget.

That means the state can't run up huge deficits, although Gov. Ed Rendell has been working toward that goal for the past six years, increasing state spending at twice the rate of inflation.

The latest fiscal news may leave Rendell and state lawmakers with a huge hangover. A combination of tax increases and cuts in state services await Pennsylvanians in 2009.

Pennsylvania ran up a $156.6 million budget deficit in December, the eighth month in a row the state has spent more money that it took in.

The budget deficit for the current fiscal year has reached $814.5 million.

The projected budget deficit for the fiscal year that runs from July 2008 to June 2009 is $2 billion. That's 'b' as in billion.

Pennsylvania tax revenues are down in almost every category.

Among the worst showing is collection of corporate taxes as the economy continues to tank.

Year-to-date corporation tax collections total $1.4 billion, which is $134.7 million, or 9 percent, below estimate, according to the PA Department of Revenue.

And with more people losing their jobs, the government can't tax their income anymore.

Personal income tax (PIT) revenue in December was $734.3 million, $58.1 million below estimate, the state says. This brings year-to-date PIT collections to $4.6 billion, which is $134.7 million, or 2.9 percent, below estimate, according to revenue officials.

For more on the state's sagging tax revenues, click on the link below:

Revenue Department Releases December Collections