HARTFORD (AP) - Gov. M. Jodi Rell says the state's revenue picture is ugly, and some tough budget cuts will be necessary in the coming months.

In an interview Tuesday with The Associated Press, the governor said she is preparing a list of spending cuts and expects it will be necessary to present the legislature with a deficit reduction plan for their consideration. She warned that "everything will be on the table."

"There are going to be some very difficult choices that have to be made," Rell said. "There will be some proposals that are going to be difficult."

Rell's budget office estimated Monday that state's budget deficit for the current fiscal year will be about $300 million, more than double previous estimates. Rell said much of that projected red ink is due to falling state revenues, especially from the income and sales taxes and the state's share of the slot machine take at Connecticut's tribal casinos.

The estimate does not account for any fallout from the recent large fluctuations on Wall Street, she said.

Rell, a Republican, can make limited cuts to state agency spending without legislative approval- 5 percent of any appropriation and 3 percent of any fund, such as the General Fund. She also is barred from reducing municipal aid and entitlements. Rell made $150 million in cuts over the summer. She imposed an out-of-state travel ban for state employees, a hiring freeze and a hold on state purchasing.

If Comptroller Nancy Wyman, as expected, agrees the deficit has reached 1 percent of the state budget on Oct. 1, then Rell has 30 days to present the Democrat-controlled legislature with a deficit reduction plan.

Rell said she is trying her best not to propose "the most onerous things," such as state employee layoffs, to cover the gap, but isn't ruling out an early retirement plan.

She said that a reduction in local aid to cities and towns is not being considered right now, but said the state needs to reduce its energy costs and overtime expenses.

"Municipal aid is not part of the 5 percent reduction, but if I have to present a plan to the General Assembly, then I have to look at every single option that we have in order to cut and save money," she said. ۩