SEATTLE -- For the first time since the state announced a growing shortfall, Gov. Chris Gregoire on Thursday talked about cuts and layoffs she's prepared to make.

The governor began by announcing her plan to balance the state's looming $5 billion deficit, but talks quickly turned into a lesson in just how much cutting and slashing it's going to take.

"If I were to eliminate all of the higher education system in the state of Washington - all four-year universities, all community and technical colleges - I'd still have almost a $1.5 billion deficit to look at. So when I say it's a daunting task, it really is," Gregoire said.

In other words, the governor says we could see the largest budget cuts and layoffs in state history very soon.

"I intend to do this within the next week or two," she said.

And no state program will be safe from the chopping block, including jobs.

"Businesses are laying people off. State government is no different, so I don't want to - it will be a last resort, but candidly I don't see any other way to make the kind of cuts that we do to meet that kind of deficit," she said.

The latest budget forecast shows the state will bring in $500 million less than expected in the last two years. Add to that a negative $1.4 billion in revenues for the 2009-2011 budget.

However, the governor says one thing she will not consider is raising taxes. But she's also not willing to cut plans for construction on the Alaskan Way Viaduct or the Highway 520 floating bridge. Those projects, the governor says, will have to be funded by tolls.

"There's no question. The 520 cannot be built without tolls, no question. There isn't any other source of money," she said.

A new cost estimate for the 520 bridge released on Thursday quoted the new total at $4.5 billion -- a $500 million increase from the previous estimate. Even with a $10 round-trip toll on the bridge, the state still does not have enough to cover the new estimate.

A new cost estimate for the Alaskan Way Viaduct range from $800 million for a surface road to $3.5 billion for the tunnel option.