MIAMI (Reuters) - Alabama's outgoing Republican governor said funding for the state government's agencies will not be cut in a new budget he's preparing, despite a projected $670 million revenue shortfall.

"In the budget I'm sending you, general fund agencies will receive the same amount of funding that they will be getting this year. No cuts," Governor Bob Riley told legislators on Tuesday in his state of the state speech. "In fact, there is the potential for them to receive an increase of up to 4 percent."

Alabama's general fund covers non-educational spending, such as the state's Medicaid health care program, prisons and state troopers.

Riley, who leaves office next January, also said he would propose that state funding for public schools be increased by more than $400 million.

Fiscal analysts employed by the state legislature have forecast revenue gaps of more than $670 million for Alabama, which has one of the lowest personal income levels in the United States.

Cost cutting, layoffs of state workers and spending restraint by legislators last year allowed Alabama to weather the economic recession better than other states facing large drops in revenue, according to Riley.

"We didn't go on a spending spree when Congress passed the stimulus bill last year," Riley said. "We saved because we knew this day was coming."

Riley gave few particulars of his budget plan other than to say it included expectations of federal funding to help states recover from recession.

(Reporting by Michael Connor; Editing by Padraic Cassidy)