SALEM - Oregon state government is facing an immediate $142 million shortfall that has prompted Gov. Ted Kulongoski to order across-the-board cuts in state agency spending.

That development Wednesday came in the wake of the state's new revenue forecast that also predicts the state will be at least $830 million short of the amount needed to maintain current services in the next two-year budget that begins July 1.

State Economist Tom Potiowsky delivered the grim news to lawmakers Wednesday, saying that Oregon's economy could well get worse in the coming months before any recovery begins.

In response, Kulongoski used his executive authority to order agencies to make cuts that will translate to about 1.2 percent of each agency's current two-year budget. Because there are only six months left in the current budget, the cut will be closer to 5 percent of what each agency has to spend until the budget expires in June, Kulongoski's office said.

"This recession demands tough decisions and requires shared sacrifice - and today's action is the first of many difficult decisions that lie ahead," Kulongoski said in a statement.

By law a governor can order across-the-board cuts by agencies. Only the Legislature can cut selectively, and leaders indicated Wednesday they might fine-tune Kulongoski's cuts when the 2009 session begins in January to protect vital services.

State Rep. Dave Hunt, who will be the next Oregon House speaker in January, said the governor by law "only has a meat cleaver" to make across-the-board cuts.

"There is a high likelihood that the Legislature will make cuts that will allow us to be more exacting," Hunt said.

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