Warning that Colorado faces a $1 billion budget shortfall through next year, Gov. Bill Ritter recommended that the state close two prisons, cut education funding, impose an unpaid furlough for most state workers and slash more than 540 state jobs.

Todd Saliman, Ritter's budget director, told lawmakers Tuesday that Colorado cannot rely on a federal stimulus package.

"There will be pain and it will be felt by many citizens of the state who rely on state services. There is just no way to avoid that," Saliman told the Joint Budget Committee, which sets state spending priorities.

Ritter recommended that the state close the Colorado Women's Correctional Facility in Canon City and the Rifle Correctional Center in Rifle and move the 400 inmates to other prisons.

Ritter wants to close a mental health clinic affiliated with the state mental hospital in Pueblo, but not the main hospital itself. He also wants to close a small child-care residence hospital at Fort Logan.

Ritter proposed keeping vacant or eliminating more than 540 full-time state jobs, imposing unpaid furlough days for most state workers and withholding salary increases for 26,000 state employees.

Other major cuts include a three-year suspension of the homestead exemption for seniors and deep reductions in higher education and public education.

Saliman said the state no longer has large cash funds that helped it get through the last recession. Many programs that were cut seven years ago have never been restored, he said.

According to budget projections, the state will be forced to cut $696 million from the general fund and find another $127 million in reduced obligations -- a 10 percent cut from Ritter's original estimated general fund budget of $8.2 billion in November.

But some Republicans worried the shortfall would be much more than $1 billion when official numbers come in March. Rep. Don Marostica, R-Loveland said the budget may need even more cutting.

"A billion dollars may not be enough," said Maroistica.

The state also is counting on $259 million from the federal government for health care services.

Department of Corrections Executive Director Ari Zavaras said the prison closures won't compromise public safety. He said the women's prison had lower than expected growth and staff can be reassigned to other prisons. He said the Rifle facility is on valuable property that can be sold.

Rep. Jack Pommer, a Democrat from Boulder, said lawmakers may ask voters for another time-out from the state's tough tax limits -- something similar to Referendum C, in which voters gave up their tax surplus refunds to help the state recover from the last recession.

He said many cuts this time could be permanent.

"This is not something where we tighten our belt and relax it two years from now," Pommer said.

Sen. Abel Tapia, D-Pueblo, said it's only prudent for the state not to count on federal help.

"I'm going to wait until the check comes before I get too excited," he said.

Senate Minority Leader Josh Penry, R-Fruita, said Ritter had a chance to cut spending last year and didn't.

"The budget news from the governor was sobering, but it was not a surprise," Penry said. "The dark clouds of recession have been gathering for more than a year, and the leaders of this state have done very little to position us to weather the storm."

But analysts with the non-partisan Colorado Fiscal Policy Institute said precisely because of the economic downturn, extreme budget cuts are the last thing Colorado needs.

"It's raining right now in Colorado and we should be looking for all of the non-cut solutions that we can come up with," said the institute's Senior Fiscal Policy Analyst Carol Hedges, "The cuts that are being considered have a significant effect on families."

The Joint Budget Committee is expected to examine the governor's proposal, make its own changes and then pass it on to the legislature for a final review. The committee said if and when a federal stimulus package is passed, they will have to review the proposal to determine where federal money can be added.