CHEYENNE, Wyo. (AP) -- Gov. Matt Mead is recommending Wyoming lawmakers generally hold the line on state spending when they start their general session in January.

However, Mead also is warning Wyoming urgently needs to figure out how it will fund its K-12 school system in response to recent declines in energy revenues and the associated decline in property tax revenues. He said the state must consider all possible options, including possible tax increases.

Wyoming operates on a two-year budget cycle. Lawmakers last spring adopted a $3.1 billion general fund budget to fund operations for the biennium that began this July. Falling energy revenues already prompted Mead to cut that budget by over $250 million this summer.

Mead's now recommending that lawmakers approve new supplemental spending of just over $8 million. He's also proposing that they approve contingency spending of over $140 million from the state's $1.5-billion rainy day fund in case it's necessary for critical state programs.

Mead emphasized that the state has saved money during recent good years for such tough times. "Wyoming is in a good place," he said in his budget message.

Mead recommends lawmakers approve issuing bonds to fund the expected $80-million cost of repairs at the crumbling state prison in Rawlins. He recommended earmarking another $19 million from the rainy day fund to cover the possible cost of housing inmates out of state in case the prison becomes uninhabitable.

Mead also recommended lawmakers approve $21 million if necessary from rainy day funds to the state health department to help cover costs of hospitalizing people for treatment of mental health issues.

For the first time in a few years, Mead is not recommending that state lawmakers accept federal funds to expand the federal Medicaid program to offer health insurance to some 20,000 uninsured, working adults.

State lawmakers in recent years have rejected Mead's repeated suggestion of expanding Medicaid. Mead has said the expansion would save the state money by reducing demand on other programs. Many lawmakers, however, have said they don't trust federal promises to continue funding the program -- a key element of the federal Affordable Care Act.

Mead on Wednesday noted that President-Elect Donald Trump has called for rolling back the Affordable Care Act, so the governor says he isn't calling on lawmakers to expand Medicaid in the coming session when the future of the federal program is unclear.

On the issue of education funding, Mead said, "I can't stress enough that we have a real crisis on our hands." He said he would favor creation of a task force including lawmakers and educators to address the issue.

Incoming House Speaker Rep. Steve Harshman, R-Casper, is an educator and has served for years on the Legislature's Appropriations Committee.

In a telephone interview on Wednesday, Harshman said Wyoming faces a shortfall of roughly $400 million a year for education funding as a result of falling property taxes brought about by declining energy markets.

Wyoming is on track to spend through more than $600 million in education reserve funds by the end of the 2017-2018 school year, Harshman said. After that money is gone, he said the state has no plan for addressing school funding.

Harshman said he's drafting legislation calling for creating a committee of the state's most experienced legislators to address the issue. He and Mead both said the state needs to consider all options, including possible tax increases.

"Everything's got to be on the table when you have a problem this big -- $400 million a year," Harshman said. "This is twice the size of the general fund budget issues we've been dealing with. I've been telling people this is too big to cut, and it's too big to tax."