IOWA CITY - Iowa Governor Chet Culver took a bold step - one with a multi-million dollar impact - to try and balance the state's budget.
The Governor has asked state agencies to cut $40 million from their budgets before June.

That's because the state has shelled out about $75 million for disaster recovery.

So he wants agencies to sharpen their pencils to find millions of dollars to help make up the difference.

Before hundreds of Iowans in Coralville, Governor Chet Culver outlined the urgent need to find some extra money...and soon.

"We've asked the agencies to find any and all money that will help us give a little more cushion to the ending year balance, " said Governor Culver.

That extra padding needs to add up to about $40 million.

No small chunk of change as economists now say Iowa is one of several states that have slipped into a recession.

The Governor says Iowa isn't as bad off as some states.

"I'm not having to write a letter to the Treasury for $7 billion like Arnold Schwarzenegger," said Governor Culver. "I've not had to do an across the boards cut totaling $2 billion like Governor Patterson in New York."

At least for now.

What if state agencies don't come up with the several million dollars in cost-savings?

"There's always tough decisions as Governor every day," said Governor Culver. "We'll figure it out."

First, the Governor would prefer state agencies do some of the heavy lifting.

"It's up to them right now to provide some options to us," said Governor Culver.

But the Chief Executive of the State has some ideas where to find some extra cash.

"Canceling conferences for example that an agency might have, looking at travel, those types of things are really voluntarily tightening of the belt," said Governor Culver.

The Governor says he is confident that as everyone works together the budget woes will be resolved.

"The great news in Iowa is that going into this economic downturn we're in better shape than almost every other state," said Governor Culver.

Here are two things that Governor Culver thinks might help Iowa amid this economic uncertainty: $640 million in cash reserves and the state's triple-A bond rating.

State agencies will present their proposed budgets to the Governor on December 12.