Pennsylvania governor Ed Rendell said nearly 800 state employees will be laid off as soon as he and the legislature can agree on a budget, and maybe sooner.

Rendell said the state must make spending cuts which make the layoffs unavoidable.

Pennsylvania's legislature has been at an impasse with Rendell over ways to deal with the state's multibillion dollar deficit.

Rendell favors an increase in the state's personal income tax, but has also said he is open to compromise.