HOUSTON -- Gov. Rick Perry asked state agencies on Wednesday to reduce spending as a defense against an economic downturn, KPRC Local 2 reported.

Delivering a state-of-the-state address before the Greater Houston Partnership, Perry said Texas still has the strongest economy in the nation.

However, he cautioned the state would have to deal with the costs of Hurricane Ike at the same time the financial meltdown on Wall Street is drying up credit.

He said state government is bracing for a reduction in tax revenue as businesses and families reduce spending.

"That's why I've asked the heads of state agencies to take a close look at their budgets. Figure out what discretionary spending they can cut. In a letter this week, I directed them to start by curtailing taxpayer-funded travel and asked them to report back on additional cost-containment measures," Perry said.

The governor said Texas still leads the nation in job creation and exports. He said he is not worried about the effect of falling oil prices on the state's energy industry. He said oil and gas are still poised for growth in Texas.