The cuts are expected to come in the form of attrition.

“The state needs to be serious how it manages attrition from employees who retire and cautious when it fills any positions that open up in other ways,” he said.

The Department of Health and Social Services, which has the most unfilled jobs, will face the brunt of the cuts, along with the Department of Correction, but all 17 state departments are facing cuts, Markell said.

“Every one of them is giving up positions. It only gets harder from here,” he said.

The governor’s announcement comes the same day the Office of Management and Budget began its monthlong hearings to review state spending and revenue.

Earlier this year, Markell eliminated 485 positions that remained unfilled when workers retired. That move saved nearly $14 million dollars. He said the savings would increase next year, as officials see a full-year benefit of the first cuts.

“We think a milestone of 1,000 positions is important,” he said.

In September, members of the Delaware Financial and Economic Advisory Council estimated that revenues for this and next year’s budget are down by $90 million.

The state is not expected to receive $100 million in federal stimulus funds that helped to close gaps in this year’s budget.

At the same time, enrollment in Medicare and Medicaid is increasing, as unemployment and retirement numbers spike, increasing the deficit.

By law, the state must balance its budget by June 30 for the following fiscal year.

The Department of Education is likely to face consolidation of the state’s 19 school districts or some of its services.

“The cuts will be across the board. We are more than willing to look at sacred cows as well,” he said.

Markell said he wants to reduce spending on school administration and bring more money into classrooms. His briefing also came with a warning to education administrators.

“The biggest challenge is getting the school districts to be part of the process. They have to come to the table and participate and engage,” he said.

Markell also said he is considering consolidating the Department of Finance – a move he said he would discuss in more detail in January when he proposes next year’s budget.

Markell declined to say if a 2.5 percent pay cut for the state’s 30,000 employees would be restored next year.

“This next budget could be more painful than the one we passed this year,” he said. “We are recognizing we need to ensure our ability to keep our core commitments. In the meantime, we continue to improve management practices to save tax dollars.”

Five-point plan

Markell also announced a five-point program to close budget gaps while improving government efficiency: identifying and removing agency-service overlaps, using new technology to make government more efficient and cheaper, eliminating state services that are provided for by nonprofit agencies, prioritizing state department needs and services, and identifying state services that might be better provided by the private sector.

“These foundations will be an important part of the balanced budget that I will present to the General Assembly,” he said. Many of the decisions to be made will be hard, but they are necessary to ensure our ability to keep commitments such as protecting public safety,” he said.

“We’ll have a lot more to say in January,” said Markell. “It’s going to be a brutal budget.”