Gov. Jon Huntsman Jr. proposed a state budget Thursday that is more than $1 billion smaller than last year, slashing state spending by up to 7 percent in the face of a dismal economic picture.

The governor seeks to shield public schools and human services from drastic hits by draining about a third of the state's Rainy Day Fund savings and slashing road projects, forcing some road work to be scaled back or postponed.

"I can tell you this is the best that we can do," Huntsman said. "We've looked at all kinds of different scenarios. … We have put people first and foremost as we have done this."

New budget projections released Thursday show another $450 million in projected shortfall on top of a $272 million hole legislators plugged last September. The worsening outlook prompted legislative leaders to ask Huntsman to convene a special session soon to deal with the shrinking revenues before the problem gets more unwieldy. Huntsman said he is inclined to wait until the Legislature convenes late next month.

"I'm going to take what they told me under advisement, but so far the answer is no," he said.

Overall, the Huntsman budget is more math than manpower at this point.

Like a group of dieters, state agencies have been given targets for the amount of dollars they must shed. The governor said he has given agencies flexibility on how to meet those targets and, as of Thursday, several agencies had not figured out what the cuts would mean in real terms.

Huntsman said there are no planned state government layoffs -- at least until the summer.

"There will be some" in the next budget year, starting in July, he said. "What size? I don't know."

There will likely be no pay raises for state employees or teachers, and no increases to the state's last-in-the-nation per-pupil spending.

The governor is asking lawmakers for a sort of state economic stimulus package to "kick-start" the lagging economy.

It would ensure continued road construction on most of the existing projects in an effort to preserve jobs. The plan would be paid for with an increase in the state's vehicle registration fee. A bump of between $6 and $22 would generate about $50 million.

Huntsman is seeking creation of a $5 million program to help new homebuyers afford houses and at-risk homeowners to avoid foreclosure. And he wants to push to the front of the line building projects that have backing from private donors -- mainly university buildings like the new David Eccles School of Business at the University of Utah.

"All told, the stimulus package would save about 20,000 jobs, at least preserve them, and it would also … keep $600 million in wages annually in the state," Huntsman said.

Aside from the increased vehicle registration fee, there are no new taxes or fees in the budget, although the governor said he remains open to a gasoline tax increase.

He proposes pulling $200 million in cash out of road projects and using the money to help keep state agencies afloat.

"I'm here to tell you we can bond and we can get by and we will be just fine and we can take some of the cash that was chasing some of our transportation projects and put it toward those critical needs," Huntsman said.

The governor's plan to borrow money for road projects is a likely point of contention with the Legislature.

Huntsman is proposing $2.5 billion in bonding, which would revive work on about two-thirds of the $3.9 billion in road projects that were put on hold last week.

"When you take that volume and squeeze it down … there will be some changes," said John Njord, executive director of the Utah Department of Transportation. "A lot of projects we talked about will continue on, perhaps in a smaller form than they were before."

But Sen. Mike Waddoups, R-Taylorsville, the incoming Senate president, said he is uneasy with the amount of borrowing the governor plans to do.

"His suggestion is we'll just borrow that money … but when there's a downturn in the economy I think we ought to cut back spending more than borrowing so much," Waddoups said.

Waddoups and House Speaker-elect David Clark, R-Santa Clara, said they would also like to see the governor call a special session so they can move quickly to address the $350 million budget hole in the current year's budget.

Waiting until the Legislature convenes Jan. 26 just means the cuts will hurt more.

Huntsman's budget director, John Nixon, said state agencies have already been asked to cut their spending to resolve the projected shortfall until the Legislature can act.

One lingering question is whether Congress will approve an economic stimulus package that would give hundreds of millions of dollars to states. Huntsman, who along with other governors met with President-elect Barack Obama this week, said he is confident there will be a bill for the president to sign by inauguration day, with significant funding for road construction, Medicaid and buildings.

Waddoups said the Legislature is not so sure.

"I think that's great but I hate to count on it," he said. "I hate to count on someone else's money."