OLYMPIA, Wash. - Gov. Chris Gregoire, facing a faltering economy and tough campaign criticism, announced immediate budget savings of about $240 million on Tuesday, including a 1 percent across-the-board cut at state agencies.

Gregoire's plan, which could lead to government layoffs, is expected to boost the state's surplus to more than $400 million and deliver ongoing savings in the next state budget.

Add money from the state's new "rainy day" fund, and Gregoire says she's got a blueprint for cutting the next state budget's deficit nearly in half, from $3.2 billion to about $1.7 billion.

Some critical state programs, including education, social services and public safety, are exempt from the 1 percent cut to agencies under Gregoire's control. The plan also includes general savings and money transfers.

Gregoire put much of the blame for the rocky financial outlook on the national economy, which is staggering through an ongoing credit crisis.

"Even though today we have a surplus and are better prepared than other states to weather this storm, we will likely face a deficit in the next two years," she said in a statement.

Agency leaders will decide exactly how to save money under the 1 percent cut, but layoffs clearly are on the table, Victor Moore, director of the Office of Financial Management, told The Associated Press.

"I think to a certain extent, it's unavoidable," Moore said.

The Democratic governor has faced intense criticism from Republican challenger Dino Rossi over the projected deficit. After months of largely dodging the question, Gregoire has lately shown signs of wanting to tackle the deficit head-on.

In response to Gregoire's latest plan, Rossi said the governor was "pretending to be a fiscal conservative" by trimming around the edges of her first term's spending increases.

"She's playing budget games rather than being honest. Her announcement today on cuts is no more than budget cherry-picking," Rossi said in a statement.

Gregoire's budget office is working on a no-new-taxes plan to solve the $3.2 billion deficit projected for the 2009-2011 budget period, which begins next July. The next governor and Legislature will have to solve the budget hole starting in January.

Gregoire's preliminary plan for the shortfall calls for $605 million in savings during the next two-year budget, achieved by carrying forward the cost-cutting actions announced Tuesday and an earlier $90 million freeze on hiring and travel.

Gregoire also would tap the new state "rainy day" fund's entire current balance to help bridge the gap. Normally, it would take a difficult 60 percent vote of the Legislature to access the fund, but the voting threshold is lowered in times of slack job growth. Gregoire's plan would leave unspent about $300 million of "rainy day" money that's expected to build up during the 2009-2011 budget cycle.

The largest chunks of the additional savings announced Tuesday are $76 million in welfare costs, offset by federal dollars; the 1 percent agency cut, expected to save $45.6 million; and about $25 million in transfers of unspent money, which normally would flow into a school construction account.

Among other cutbacks were three favorite projects of Democratic lawmakers: Suspension of a proposed paid family leave program, halting set-up work on a sales tax credit for the working poor, and the rollback of unspent money meant for property tax deferrals.

Senate Republican budget chief Joe Zarelli, R-Ridgefield, gave Gregoire credit for facing the deficit. But he said further projections of state revenue and growth in essential services could take back some of Gregoire's proposed savings.

"The big thing is, where are the sizable spending decreases that are going to make the difference?" he asked.

Senate budget Chairwoman Margarita Prentice, D-Renton, said the general direction of Gregoire's plan sounded prudent. Washingtonians are suffering through the economic downturn, she said, and government also will have to tighten its belt.

"We're all going to have to share in the pain," Prentice said.