Gov. Jon Huntsman Jr. announced Wednesday he'll call lawmakers into a special session late next week to plug an estimated $200 million tax shortfall in the current budget year.

Lawmakers said they're ready to roll up their sleeves and make the needed cuts.

"We all understand there's a problem, and we're going to act on that," said House Majority Assistant Whip Brad Dee, R-Washington Terrace. "We're going to address it now. We're not going to wait until after the election."

Huntsman's plan for dealing with the crunch is to require all state agencies — except education — to cut their budgets by 2 percent and to

bond for some transportation and building projects instead of paying cash as called for in the budget that took effect July 1.

"They're moderate cuts across the board in state agencies but holding education harmless," said the governor's spokeswoman, Lisa Roskelley, adding that the governor has no intention of dipping into the Rainy Day fund, which is set aside for emergencies.

Roskelley said the $200 million estimate is "not a concrete number" but should be close to the amount of the shortfall. She said the governor wants to deal with the issue now, rather than wait until the 2009 Legislature begins in January.

Legislative leaders agreed. Sen. Lyle Hillyard, R-Logan, the Senate budget committee chairman, warned that state agencies might be forced to cut twice as much if action is delayed until what would be the third quarter of the budget year.

"Three months in will be a whole lot less painful," said Francine Giani, executive director of the state Department of Commerce. Giani said she had already instituted a hiring and travel freeze.

The governor had advised department heads this summer to curb spending and requested they prepare contingency plans showing how they would reduce their budgets by 1 percent, 3 percent and 5 percent.

While both the House and Senate GOP majority caucuses asked Wednesday for a special session to deal with the situation, they have yet to settle on details. A more firm estimate of the size of the budget shortfall is expected early next week.

"There are a lot of questions we don't have answers for yet," said Senate President John Valentine, R-Orem. He said the need for a special session was first raised Tuesday at a meeting he and House Speaker Greg Curtis, R-Sandy, had with the governor.

Valentine said Senate Republicans meeting in closed caucus talked about making an even bigger reduction in the budget, 3 percent. "We recognize we still have to negotiate with the governor," he said.

After a confusing House GOP caucus that was open, members voted unanimously to ask the governor — who has sole authority to call special legislative sessions — to have them formally meet to deal with what some GOP lawmakers are calling only the start of dwindling state revenues.

Rep. Ron Bigelow, R-West Valley, the House budget chairman, later told reporters the state was prepared for a shortfall, having set aside an extra $100 million for education last session as well as adding to the Rainy Day fund.

But, he said, it could be a while before the economy is on an upswing again. "We may have a couple of years where revenues are pretty tight," Bigelow said.

The 2008 fiscal year ended June 30 with an $83 million shortfall — an amount that will be covered if need be by a $414 million Rainy Day fund and/or "unspent surpluses" in various state agency accounts, GOP leaders said.

"We are at least $100 million" down for this year, said House Majority Leader David Clark, R-Santa Clara. Next week legislative and executive branch economists will meet to decide just how "deep this hole is," Clark said.

Clark said $100 million will come from cuts to state departments almost immediately and $100 million will wait for further study. Meanwhile, public education won't be cut at all.

"The intent is to hold harmless public education," Bigelow told the caucus, at least through the current budget year. That may not be the case in the new budget year that begins July 1, 2009.

Some House Republicans weren't happy that what could be a controversial special session will be called just before the November elections, where all 75 House seats and 15 of 29 Senate seats are up for election.

"The timing of this sucks," said Rep. Kory Holdaway, R-Taylorsville.

But Clark and others said politics be damned — Republicans have done a great job in keeping Utah on a strong fiscally conservative track over the years and they won't shrink from this new budgetary challenge, either.

However, as GOP House members were voting to come into a special session to deal with the budget shortfall in this year's budget, leaders passed out two sheets of "campaign talking points" listing all the accomplishments of the GOP-controlled Legislature over the last several years, including record spending on public education.

House Minority Leader Brad King, D-Price, praised the governor for acting quickly. "As Democrats, we want to make sure that programs that affect people aren't harmed — we don't want to hurt people or public education."

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