RALEIGH, N.C. -- Heading out of office with a souring economy like his predecessor, Gov. Mike Easley ordered state agencies to reduce their budgets by 2 percent and place the money in reserve in case this year's small shortfall widens.

Easley directed the state budget office to require the cost savings. The unused money will be set aside in case other budget holes need to be filled, or it could be returned to the agencies if the economy improves.

Tax collections are already as much as $70 million below the revenues that the Legislature budgeted through August, according to a recent report by the General Assembly's top economist. Easley believes the precaution is necessary, administration officials said.

"The governor is committed to ensuring that the next administration has sufficient reserves to manage this potential situation," state budget director Charlie Perusse said in a memo to department leaders dated Sept. 18.

The budget approved by the Legislature for the fiscal year starting July 1 was more than $21 billion, but at least half of that spending probably won't be affected because the directive doesn't apply to public education, Medicaid and student financial aid. So cost savings probably will be closer to $200 million.

The reductions will begin Oct. 1 in the amount of money distributed to the identified agencies, Easley budget adviser Dan Gerlach said Thursday.

"The agencies prefer that if you want to hold back money, do it sooner rather than later" in the fiscal year, Gerlach said.

Rep. Mickey Michaux, D-Durham, senior co-chairman of the House Appropriations Committee, said he believes departments won't have too much trouble finding those levels of reductions.

"Two percent is not going to hurt agencies," Michaux said. "They've always been able to fund that much and he's given them the free rein to do that."

Within a month of taking office in early 2001, Easley had to declare a budget emergency as a shortfall ultimately grew to $850 million, requiring legislators to raise sales and income taxes to help make up the difference. The shortfall grew to $1.6 billion in 2002.

Easley, who leaves office in January, has said repeatedly during his second four-year term that he would work to ensure that his successor wouldn't face a similar fiscal crisis.

State government is in better shape this time around. A rainy-day reserve has $800 million, instead of being dried up earlier this decade by Hurricane Floyd relief and costly litigation.

A leading legislative Republican said the reductions should have been deeper.

Administration officials "know that expenses, such as fuel costs for school buses and health care for state employees -- is higher than budgeted," said Rep. Dale Folwell of Forsyth County, the GOP's joint House-Senate caucus leader. "I applaud him for doing it. I don't think it will be the last" reduction.