The extra space is coming from the bottom margin on the footer widget. You can remove the space by reducing the value of the margin (change the last number to a value that works for you):
margin: 0 0 0.1em;
I noticed that you have hidden the WordPress.com footer credits with CSS. All WordPress.com bloggers (even our VIP bloggers) are required to maintain the credit links, even if they have purchased the Custom Design upgrade. Please remove the CSS that is hiding the footer credits. Thanks!