RICHMOND, Va. - Gov. Timothy M. Kaine on Thursday announced 567 state employee layoffs, cut college funding by at least 5 percent, ordered some older prisons closed and postponed state employee raises to deal with a $2.5 billion government fiscal crisis.

The governor will also ask the General Assembly to approve about $250 million in debt for capital outlay projects now paid with cash and to withdraw about $400 million from the state "rainy day" cash reserves just to make ends meet in the current fiscal year.

The austere round of cuts is the third imposed since October and the deepest in at least five years. They come amid a worsening global economy that Kaine acknowledged would probably force even more cuts in the next fiscal year.

"We might decide as we see events play out here in the next month or two that for purposes of the decisions we make in the 2010 budget that we would cut expenses further, that we would go beyond the revenue estimate," Kaine said somberly at a news conference.

"Nationally, we don't know where the bottom is," Kaine said. "All we can do is make the real decisions in real time, not putting it off until later to keep this budget in balance and protect the services that are most critical."

Kaine projected that revenues for the current fiscal year which began in July would be about $973 million short of their targets. For the fiscal year that begins next summer, the shortfall is estimated at more than $1.5 billion.

As dark as the Democratic governor's forecast was, there were legislators who feared he may have been too optimistic.

"I just don't see it being $2.5 billion. I wish I did," said House Majority Whip Kirk Cox, R-Colonial Heights.

Economists and advisers with whom Kaine met last month set the shortfall in a range from $2 billion to nearly $3 billion. Kaine split the difference, and Cox said Kaine observed "a very thoughtful process" to reach what seemed a reasonable figure.

"But, boy, has the world changed in the last two weeks," he said. "I think he should have started at $3 billion and then see where it goes from there."

The steps Kaine announced Thursday deal only with the current fiscal year. He is leaving the more dire prospect of reconciling the fiscal 2010 shortfall for the amended budget he must submit to legislative money committees in December.

Total agency spending reductions in Kaine's newest directive would total about $323 million in savings. About $75 million will result from job cuts and layoffs, according to the administration.

Virginia will save another $44.7 million by postponing until next July the 2-percent raises state workers were to receive next month.

The layoffs shook the confidence of state employees in a government that will expect them to do more with less, said Bill Elwood, director of the 12,000-member Virginia Governmental Employees Association.

"They will be expected to do so after a meager 2 percent raise was snatched from them at the last minute, a raise that was supposed to cover the cost of increased health insurance premiums that went into effect in July," Elwood said.

The bulk of the layoffs, 330, come from the Department of Corrections, where Kaine is ordering six prisons closed, including the 70-year-old Southampton Correctional Center, a medium-security lockup for about 650 inmates about 70 miles south of Richmond. It is the largest of those to be shuttered, and among the oldest in the system. Kaine said he targeted those sites because they cost more to operate and need to be replaced.

"When we have plans to build new institutions, why invest in old facilities ... to prop up a structure that needs to be replaced anyway?" Kaine said. "By closing Southampton and demolishing it, we then have the site for the next prison."

Kaine's actions project about $100 million of the savings from "improved business practices and efficiencies," including closing the Science Museum in Richmond for an additional day each week and $1.7 million in unspecified technology cost reductions by the Department of Taxation.

Nearly $50 million would come from unspent cash balances some state agencies had left over from the 2008 budget, which expired June 30.

Kaine largely spared cuts to state support for public schools from kindergarten through 12th grade for this year. He deferred them for a year because of the difficulty local school districts would have absorbing an unexpected drop in state funding in the midst of an academic year.

"Things that we left untouched in '09, I need to point out will definitely be examined and are not going to be untouched in 2010," Kaine said.

The Virginia Education Association, which represents 60,000 public school teachers statewide, immediately began pushing hard to escape next year's cuts, proposing instead that taxes cut in recent years be reinstated. VEA president Kitty Boitnott advocated restoring the estate tax and and tax credits landowners receive for dedicating some of their property to permanent conservation purposes.