DES MOINES - State Auditor David Vaudt said Thursday it's likely Gov. Chet Culver will have to dip into the state's surplus reserve to cover a revenue shortfall and balance the fiscal 2009 budget.

Vaudt said state tax collections fell $160 million short of projections when the fiscal year ended June 30, so the "big question mark" is where spending levels will finish when the books are officially closed in September.

Given that most state agencies absorbed across-the-board cuts and other cost-saving measures during fiscal 2009, "I can't imagine there will be a lot of under spending."

Lawmakers set aside $44.5 million for a projected ending balance, and the governor has authority to transfer up to $50 million from the state's cash reserve to cover an unexpected budget shortfall.

"I would say that it's highly unlikely that he wouldn't have to tap the cash reserves for his authority at least to balance the budget for '09," Vaudt said Thursday.

Last week, Culver acknowledged he likely will have to use surplus funds to balance the fiscal 2009 budget when the books are closed in September given the continued strain the national recession is putting on Iowa's economy and job climate. He said the overall budget imbalance appeared to be $58 million once reversions, accruals, transfers and other year-ending calculations are included.

However, the governor said he was confident the budget can be balanced without convening a special legislative session. He also said he was prepared to consider spending cuts and government streamlining as early as this fall to meet future challenges posed by a prolonged recession.

Vaudt said the eroding revenue picture raises concerns about the state's planned spending level for the 12-month period that began July 1 - with downward revisions likely needed on both the spending and revenue sides.

"It depends on what happens with the rebound - if it occurs and when it occurs," he said.

The auditor said he did not put much stock in Standard & Poor's decision last week to give Iowa an Aaa credit rating in assessing the state's budget outlook.

"The rating agencies also gave Aaa credit ratings to Enron, Freddie Mac and Fanny Mae, and we know what happened to them," Vaudt said. "So I don't place a great deal of reliance on what the credit agencies are doing from a due diligence standpoint."