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RALEIGH (AP) - Preparing for a revenue shortfall that number crunchers said Thursday could reach $1.6 billion, outgoing Gov. Mike Easley's administration has ordered more cuts and savings to keep the state government budget balanced.

Several state departments have now been ordered to make do with 5 percent less than originally budgeted by the Legislature this year, up from the 2 percent trim ordered by Easley last month, state budget director Charlie Perusse told lawmakers.

"We can in effect essentially get this money upfront and have it to help balance this budget for this fiscal year," Perusse told the Joint Legislative Commission on Governmental Operations, the General Assembly's chief oversight committee when it's not in session.

Barry Boardman, an economist working for the Legislature, told lawmakers Thursday the budget shortfall could range from $800 million to $1.6 billion for the fiscal year. The range is wide because the national economy is so volatile, he said.

Lawmakers have known for a few months there would be a gap to fill in the $21 billion budget for the fiscal year that started July 1, and that it would be a significant problem for the next governor - Democrat Lt. Gov. Beverly Perdue, who was elected on Tuesday.

A General Assembly report last month showed a $230 million gap between projected and actual tax collections in the first quarter, through the end of September. But the first quarter is generally the least volatile and it didn't reflect the worldwide economic crisis and bank bailouts that have intensified a housing decline and tightened credit, Boardman said.

Perusse said Easley's office believes the most likely scenarios will have state revenues dragging behind projections from $1 billion to $1.2 billion.

A budget management plan provided to lawmakers would hold back $1.2 billion to fill any essential gaps by requiring additional spending reductions throughout state government. Agencies are being given flexibility to decide where to make the spending reductions.

Legislative leaders were pleased with Easley's proactive plan, though they complained about his decision to hold back on capital projects and building repairs, and questioned whether he had authority to tap into $287 million in reserves without their approval.

"We have an early start on managing the problem," said House Speaker Joe Hackney, D-Orange. "I think it's being handled very well and all the proper precautions are being taken."

Easley wants the Department of Environment and Natural Resources, Department of Commerce and other smaller agencies to trim their budgets by 5 percent. The University of North Carolina and community college systems must find 4 percent reductions, although student financial aid wouldn't be affected.

The state's struggling mental health program would be asked to make do with 3 percent less, just like the prisons, the court system and Department of Justice. Public school reductions, projected to be $117 million, are voluntary.

"We've had this before many times, and you'll see it's a mirror of what's occurring in the country," said Senate leader Marc Basnight, D-Dare. "You make your adjustments and you debate where you can strengthen job opportunities and make sure the economy in North Carolina's a little more competitive."

Rep. Alice Bordsen, D-Alamance, didn't like the 5 percent reduction ordered by the Department of Juvenile Justice and Delinquency Prevention because it has returned more unused money than other public safety agencies.

"It looks like they're being punished for being diligent," said Rep. Alice Bordsen, D-Alamance, co-chairwoman of a budget subcommittee that deals with public safety issues. "That department is grossly underfunded."

North Carolina was one of the last states to feel the pain of the economic downturn and is in a better fiscal position than during the budget crisis earlier this decade, when a shortfall reached $1.6 billion in 2002.

The state has $800 million in reserves if needed and Easley, who was stung by a budget emergency a month after taking office in 2001, has had a laser-like focus on giving his successor, Perdue, more breathing room when she takes the oath of office in January.

Easley's plan doesn't consider how to shore up the state employee state health plan, which could run out of cash to pay claims early next year and could need an additional $300 million.

Then the state will have to find money in next year's budget for employee pay raises and to pay for increased public school and university enrollment.

"It don't look real good to me," said Rep. Jim Crawford, D-Granville, another House Appropriations Committee co-chairman. The Legislature convenes its two-year session a couple of weeks after Perdue moves to the Executive Mansion.