Halfway through the budgetary year, Pennsylvania's revenue is coming up hundreds of millions of dollars below expectations.

That's on top of an underlying structural deficit of nearly $2 billion.

The revenue plan for this year's budget was largely cobbled together from sales-based income — including a cigarette tax — and various other non-recurring sources.

But, not all that money has come through.

Budget Secretary Randy Albright said revenue is expected to come up roughly $600 million  short at the end of the fiscal year in June. That's not even counting $100 million from a gambling expansion bill that has yet to be passed.

Albright noted that the challenges related to this shortfall shouldn't be minimized.

"They're as significant, I think, or more significant than any previous administration has faced," he said. "At least during my 30-plus years of state service."

He said the administration's first step will be to try and make internal cuts.

"What we intend to do is work very surgically," he said. "So we are working with every cabinet agency to make hard decisions assessing the way that they deliver services and where things can be done."

House Majority Leader Dave Reed said he and other Republicans agree with that approach, and they'll look at anything from combining agencies to privatizing services.

In the past, the governor has attempted to pass broad-based tax increases to deal with budget shortfalls, but has always been stymied by GOP lawmakers.

Reed confirmed that the GOP remains fully opposed to tax hikes.