Pennsylvania lawmakers' failure to pass a measure that raises tax revenue by expanding casino gambling could mean more state employee layoffs, the governor said.

Gov. Ed Rendell said today he will have to lay off at least 1,000 more state employees if the Legislature cannot resolve a stalemate over the bill by Jan. 8. Rendell is counting on $250 million from taxing revenue from poker, blackjack and other table games as part of October's state budget agreement. Without it, he says, he'll have no choice but to slash spending on salaries and operations.

However, Rendell delivered good news to Penn State and several other universities. He says he will approve their state subsidies that he had held up while waiting for the Legislature to pass a gambling bill.