Even with healthy Utah economy gov. pinches pennies

SAN FRANCISCO (Reuters) - Utah Gov. John Huntsman says he is putting most state workers on a four-day workweek to extend state service hours, improve employees' quality of life and better compete with private-sector employers.

Also, he wants to save money, an increased focus for many governors -- dramatically for those of fellow Western states Arizona, Nevada and California -- as the national economy slows.

Huntsman told Reuters in a telephone interview on Wednesday that he expects Utah can shave 20 percent from its heating and air-conditioning bills with most of its buildings open for business four days a week instead of five.

"It's several million dollars," the Republican governor said, referring to the expected savings from his initiative, which is expected to last a year.

Added bonuses may include a smaller carbon footprint for Utah and, potentially, state employees on their three-day weekends spending more money -- or at least spending money somewhere other than at gasoline stations to fill up for driving to and from work, Huntsman said.

"It's hard to know, but at least they have the choice," Huntsman said.

Under Huntsman's plan, state workers will work longer hours each day to make up for the lost day. Officials are working the finer points of the plan.

Utah has in recent years enjoyed one of the strongest of state economies, but even it may need the savings.

Huntsman and other state leaders will have a better idea of state revenue trends later this month or next. Trimming state spending is not out of the question, although not likely to the extent as in neighboring Nevada and Utah, Huntsman said.

Large housing markets in those states are disaster zones of foreclosures and stalled developments, troubles that have directly and indirectly cost their respective state government hundreds of millions of dollars in lost revenues.

"Our housing market is properly aligned, I would argue, with the value of our economy," Huntsman said. "We don't have the artificiality of housing built into our economy, like in Clark County (Nevada) or Maricopa County (Arizona)."

The housing slump is being felt especially hard in those two counties and it has battered the finances of Nevada and Arizona, two of the fastest growing states early this decade and once magnets for home builders and speculators.

Housing payrolls in both states have been slashed, dragging down related business activity. At the same time, many homeowners are struggling to meet rising mortgage payments, or are pinching pennies. State revenues have crashed as a result, forcing dramatic measures.

Arizona Gov. Janet Napolitano last Friday signed a $9.9 billion budget that closed a $2 billion shortfall with deep spending cuts, fee increases and borrowing. Balancing it required "painful" cuts, the Democratic governor said.

Also last Friday, Nevada lawmakers began a special legislative session to take up measures that culminated in an additional $275 million spending cut to balance the state's books. More cuts may be needed, according to Gov. Jim Gibbons.

California may, like Nevada and Arizona, impose deep spending cuts as part of its effort to balance its budget.

The most populous state faces a budget shortfall of more than $17 billion, which includes Gov. Arnold Schwarzenegger's plan for a $2 billion reserve.

Lawmakers are haggling over a spending plan, having passed the Tuesday start of the state's new fiscal year without approving one. Democrats who control the state legislature have signaled that they will accept spending cut, but not to the extent Schwarzenegger has urged. Republican lawmakers, meanwhile, are opposing his call for across-the-board cuts.

(Editing by Jonathan Oatis)