With the state facing a budget shortfall, Kansas Gov. Kathleen Sebelius said Friday she is asking all cabinet agencies in Kansas to find ways to reduce their fiscal year 2009 budgets by 1 to 2 percent.

Sebelius told the State Finance Committee that the action was in response to lower-than-expected revenue forecasts and a slowing economy. In addition, she said state revenues took an $87 million hit when the Kansas Legislature chose not to decouple from federal tax legislation.

“As a result we must now make adjustments,” Sebelius said. 

There was no targeted cutting in the governor's plan. Instead. the cuts were across-the-board, hitting nearly all agencies and programs with equal force.

The governor asked the State Board of Education and the Board of Regents to scour their upcoming budgets to reduce overhead and administrative costs. She did stress that she is not asking for cuts in student-related expenses.

State Budget Director Duane Goossen is projecting a $188 million budget shortfall in FY 2010, and a $400 million shortfall the following year.

Rep. Mike O’Neal, a Hutchinson Republican, commended the governor. “I think it was a good idea to put agencies on notice that cuts are going to be needed,” he said.

O’Neal, who is vying for the House speakership, said the Legislature had gotten a “wake up call” after the session adjourned, when revenue projections came in less than were anticipated.

“I think it’s smart to start doing something now,” O’Neal said.

Sebelius claimed Kansas’ economy was still performing well compared to some other states, despite the state's Labor Department report showing a rapid rise in poverty in the state during her administration.

“In the past year we have added thousands of jobs and tens of thousands more are still open across Kansas,” she said. “This job growth has kept our unemployment rate well below the national average. Recently however, our growth has showed signs of slowing down. In addition, interest rates have fallen, causing our interest income to decrease.”

But most job growth in the state, according to the Labor Department report, was in the lowest range of service sector jobs, such as fast-food restaurants.

Cabinet agencies are in the process of developing their 2009 budgets now. They will be completed this fall. The budget is expected to be a top priority for the Legislature when it convenes in January.