$310 million shortfall calls for smaller raises for Georgia employees, cuts in other programs, governor says.
The Atlanta Journal-Constitution
Published on: 03/11/08
About 200,000 teachers and state employees would get smaller raises, schools wouldn't get new buses and computers and public health programs would get less funding than expected under the fiscal belt-tightening recommended Monday by Gov. Sonny Perdue.
Perdue called for dozens of budget reductions after seeing another poor month of tax collections in February and deciding he could not wait to react to a slow economy.
"As we see the economic clouds gathering over the nation, I don't think we can expect they will miss our state," the governor told reporters. "I am committed to not wait too long to respond in a proactive way."
After seeing tax collections barely inch up in February on the heels of several poor months, Perdue lowered by $310 million his estimate of how much tax money the state will take in over the next year and a half.
That reduction forces lawmakers to begin looking at ways to cut $310 million in projected state spending.
"We're going to have to do everything all over," said House Appropriations Chairman Ben Harbin (R-Evans).
What will be lopped from the $21 billion budget for fiscal 2009, which begins July 1, is not known yet.
However, Perdue is recommending that the state reduce the pay raise for 200,000 teachers and state employees next year. In January, he proposed a raise of 2.5 percent. The governor said Monday that cutting it to 2 percent would save $46 million.
The governor also is recommending that the General Assembly not pay for new school buses and computer equipment this year. He had proposed spending $65 million on those two items.
In addition, Perdue recommended lawmakers cut out or reduce the amount spent on some of his own proposals, such as one to get parents more involved in troubled schools. Less money would go to public health programs than the governor earlier recommended, and the state would borrow millions to repair and renovate college buildings rather than pay for the work with cash.
A $15.6 million state history museum in the old World of Coke building would be scrapped, fewer new state troopers would be trained and fewer new prison beds would be added.
"We will need to rein in spending all across state government," he said.
State considered 'at risk'
Perdue's decision may make it much more difficult for House leaders to keep their promise to end five years of cuts to the state's basic school funding formula.
With less money to spend, filling that hole will be much more difficult.
Tax collections have been down or relatively flat in recent months. The slow economy has especially hurt sales tax collections, particularly in areas related to housing and home improvement.
Overall, the Georgia economy is still growing, but the state is among those that are "at risk," according to Economy.com. The jobless rate in Georgia jumped to 5.2 percent in January from 4.6 percent the month before, the Georgia Department of Labor reported last week.
Housing, once the economy's driving wheel, has become a drag: Housing permits fell 47.6 percent during the last quarter, according to the Georgia State University Economic Forecasting Center.
Tax collections were up one-half of 1 percent in February over February 2007, a gain of $4.6 million.
Tax collections for the eight months of the fiscal year are up 1.9 percent over the same period in fiscal 2007. Before Perdue's lowered revenue estimate, the budget needed an increase of 3.27 percent.
The state has about $1.5 billion in reserves, which it could dip into if there is a shortfall. Perdue said Monday that he would do so if necessary.
Belt-tightening for all?
Reaction to Perdue's announcement, and his recommendations, was mixed.
"I think he did a good thing," said Senate Appropriations Chairman Jack Hill (R-Reidsville). "This sends a message to everybody that we have problems, and we are not going to wait, we are going to meet them head-on."
Harbin said House members remain committed to increasing school spending, even with Perdue's budget-cutting recommendations.
"I am going to have to look through this [Perdue's recommendations] and see if the cuts he wants are ones we should go along with," he said. "Maybe the way we should do this is ask everybody, including the governor's office, to tighten their belts a little rather than cutting needed programs."
Budget-writers' hard task
Perdue's announcement complicates the job of legislative budget-writers. The House and Senate have been at an impasse for several weeks on the $300 million mid-year addition to the budget for the fiscal year, which runs through June 30.
Perdue's new projections mean $65 million will have to be cut from the mid-year budget plan. Another $245 million would be cut from the proposed 2009 budget.
Neither chamber has voted yet on a fiscal 2009 budget, but the legislative session is down to the last 11 working days.
The governor has cut revenue estimates before. He did it at least four times during the 2004 session, when a Republican Senate and a Democratic House were at loggerheads over spending.
Democrats accused the Republican governor of using his power to reset revenue projects to limit what lawmakers could spend. By law, the General Assembly cannot approve spending more money that the governor says will be taken in.
House Republicans had been predicting for weeks that the governor would lower the revenue estimate to keep them from putting the extra money into schools.
Senate leaders, who usually side with Perdue, said he did the right thing.
"It is always our goal to lead in a fiscally responsible manner and we will adjust to the current economic condition," said Lt. Gov. Casey Cagle, the Senate's president. "Georgia's taxpayers live within the confines of their budget and we should be expected to do the same."
Staff writer Michael E. Kanell contributed to this article.



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