By Tony Romeo

By Tony Romeo

HARRISBURG, Pa. (CBS) — Pennsylvania’s budget secretary says increasing costs are opening a budget hole that could top $1 billion in the next fiscal year.

Budget secretary Charles Zogby today delivered his annual mid-fiscal-year briefing for reporters,  saying another big challenge lies ahead for the fiscal year that will begin in July.

“It really depends on the assumptions that you make up front,” he said, “but I think it’s fair to say that we’re at closing about a 1.2 to 1.4-billion dollar gap.”

Zogby says one big area of growth is teacher and state employee pension increases of more than $600 million.  And he says Gov. Corbett is still hopeful for pension reform.

“We’ve had some very good discussions and we’re looking right now at, I think, some options that could potentially provide some promise for a strong reform package in the new year,” he said.

According to Zogby, the state is also facing hundreds of millions of dollars in increased spending for medical assistance and corrections.

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