ATLANTA -- Florida's cabinet yesterday agreed to slash state spending by $579 million in an effort to bring the state's fiscal 1992 budget into balance.

The action followed a finding by the Florida's revenue estimating conference last month that projected a $622 million revenue shortfall in fiscal 1992, which ends June 30, largely the result of lower-than-expected sales tax collections.

According to that report, state revenues are now expected to total only $10.9 billion for the year, 5% lower than the $11.5 billion expected.

"The cabinet obviously didn't want to reduce services, but it felt that the cuts were something that needed to be done -- we had to act responsibility to bring spending in line with revenues," Eva Armstrong, Florida's deputy treasurer, said yesterday.

Ms. Armstrong said Florida's seven-member cabinet voted 5 to 2 in favor of the spending reductions, with Commissioner of Education Betty Castor and Secretary of State Jim Smith opposed to the cuts. Florida's cabinet is composed of the governor and the state's top six elected and administrative officials.

The deputy treasurer said the $42.7 million difference between the revenue shortfall and the cuts approved by the cabinet will be taken out of Florida's working capital fund reserves -- lowering that fund to an estimated balance of $152.1 million at the end of fiscal 1992, down from the $194.8 million expected.

Implementation of the budget cuts, however, must await a final decision by the state's Supreme Court on whether the cabinet has the authority to cut the budget without seeking prior legislative approval, Ms. Armstrong said.

That authority has been challenged by lawyers representing a foster children's program that would be eliminated if the cutbacks occur. On Monday, the state's high court temporarily voided a restraining order imposed on Oct. 17 by Dade County Circuit Judge Henry Ferro that had ruled that Gov. Lawton Chiles and other cabinet members would be held in contempt of court if they even discussed budget cuts.

According to information released yesterday by the cabinet, the bulk of the cuts were made in the area of schools, social services, and the judicial and prison system. The state's education budget was reduced by $28..9 million, its Human Resources Services budget by $159.8 million, the corrections system's budget by $45.6 million, and the judicial system was cut by $13.5 million.

Rating agency officials said yesterday that they were pleased the state had responded so quickly to its budget shortfall.

"I feel they are acting in a responsible manner to restore balance to the budget, based on a review of economic and budgetary assumptions," said George Leung, managing director of state ratings at Moody's Investors Service.

"This is the kind of rapid response to the state's fiscal problems taht we have been looking for since the revenue estimates came out last month," said Jon. D. Reichert, assistant vice president at Standard & Poor's Corp.

Florida's $4.8 billion of full-faith-and credit debt is rated double-A by both Moody's and Standard & Poor's.

Gov. Chiles must now present his spending plan for fiscal 1993 to the legislature by the end of next month. According to one legislative estimate, there is a $1.7 billion gap between spending and revenues if state spending is maintained at its present level.

Gov. Chiles has demanded the legislature institute a number of changes in its approach to the state's budget before he will consider raising taxes as a solution to the budgetary crisis.

Those changes include: a permanent ban on "turkeys," or pork-barrel projects for lawmakers' home districts; a reorganization of state agencies and the state's career civil service organization; and impositionof a 72-hour cooling off period between the drafting of a budget agreement and the final vote on that agreement.

Separately, the cabinet also gave its final approval to rules prepared by the state's division of bond finance, clarifying the circumstances and procedures under which bonds may be sold by negotiated sale.

The rules exclude underwriters or bond counsel who have contributed to election campaigns for the governor or cabinet members from participating in state-level bond issues.

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