SALEM - Oregon state government is facing an immediate $140 million shortfall that is prompting Gov. Ted Kulongoski to order across-the-board cuts in state agency spending.

That development today comes in the wake of the state's new revenue forecast that also predicts the state will be more than $800 million short of the amount needed to maintain current services through 2011.

State Economist Tom Potiowsky delivered the grim news to lawmakers this morning, 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, 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.

Potiowsky issued his quarterly revenue forecast only a few days after the release of what he called a "horrible'' state jobless report. It showed that Oregon's unemployment rate soared to 7.3 percent last month, well above the national average of 6.5 percent.

He said Oregon's economy is in the same downward spiral as the rest of the nation, with home prices falling, thousands of Oregonians losing their jobs and consumers "missing in action,'' and not spending on anything beyond the essentials.

On Dec. 1, Kulongoski is to release his proposed 2009-11 budget that will have to take into account sharply reduced revenue available for the next two years.

That could translate to less money for schools, universities, human services, state police and other state services when the 2009 legislature convenes in January.