AUSTIN, Texas (AP) - Texas Republican leaders ordered state agencies Tuesday to immediately cut their budgets to brace for a shortfall of up to $18 billion.

With some exemptions for crucial programs, Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus said they ordered the Legislative Budget Board to tell government agencies to implement the reductions, designed to save $1.2 billion.

State agencies were asked in January to provide Texas leaders with recommendations on how to cut their budgets by 5 percent.

At the time, leaders exempted health care benefits and eligibility levels in the Medicaid and Children's Health Insurance program. They also exempted certain teacher and state employee retirement programs, contributions to the state Higher Education Fund and debt service for ongoing obligations.

On Tuesday, the top three state leaders expanded the exemptions to cover certain programs involving homeland security, job training, emergency health care and student financial aid.

The budget shortfall, which officials has said could be as high as $18 billion, is largely a result of the national recession. It's the projected difference between available revenue, mostly from lower-than-expected sales taxes, and the cost of maintaining services at their current levels. The state's Rainy Day Fund is expected to have a balance of about $8.2 billion.

Straus has raised the possibility of unpaid furloughs and four-day workweeks for state employees as way of saving more money.

Texas lawmakers will confront the budget shortfall when the Legislature meets in January.

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