The slumping economy has legislative leaders reconsidering the $700 million in new spending they approved last spring.

That means hundreds of new jobs will probably be axed, about $150 million in tax cuts could be delayed, and everything —- including pay raises for 200,000 teachers and state employees —- is on the table for trimming.

One budget think tank said Tuesday the state could face a shortfall of more than $2 billion.

"The numbers are sobering," said Senate Appropriations Chairman Jack Hill (R-Reidsville). "The $700 million we approved in new spending for fiscal 2009, we're fixin' to go over that with a fine-tooth comb."

Lawmakers, in concert with Gov. Sonny Perdue's office, hope to develop a plan in the next few weeks. At least one of the proposals could force a special legislative session this fall.

"I'd rather be upfront right now and tell people what's going to happen and then be surprised if we have some growth and we don't have to affect all these programs," Hill said.

State tax collections were down 9.4 percent in June, the final month of fiscal 2008. They were off 1.1 percent for the year. The state had to use $600 million in reserves to make ends meet.

Perdue ordered state agencies to plan for a 3.5 percent cut. However, he excluded most k-12 education and public health care programs.

The cuts would save the state about $250 million.

House Appropriations Chairman Ben Harbin (R-Evans) said that won't be enough.

In the final three months of fiscal 2008, overall tax collections fell 7.3 percent compared with the same period the year before, according to the Georgia Department of Revenue.

Corporate income taxes plummeted 26.7 percent, and sales tax collections dropped 8.6 percent.

The Georgia Budget and Policy Institute, an Atlanta think tank, called on lawmakers to hold a special session to work on the budget.

The group said lawmakers need to do more than just cut spending.

"Depending on across-the-board budget cuts alone to balance the budget would have a significant negative effect on the education, health care and safety of a majority of Georgians," said Alan Essig, executive director of the group.

There is still $900 million left in state reserves, but lawmakers don't want to drain the fund.

Essig's organization recommends raising cigarette taxes, reducing or eliminating property tax grants first approved in the late 1990s, eliminating or reducing the employee pay raises, and eliminating the special-interest tax breaks legislators approved during the 2008 session.

Hill said a special session would be needed this fall if lawmakers choose to delay the tax cuts because they will need to change the date they take effect.

A special session would probably occur in September because lawmakers would want to get it over with before the election season kicks into high gear.

During the 2008 session, lawmakers passed two premium tax breaks for insurance companies, a $10 million tax cut for moviemakers and a tax cut of more than $20 million on manufacturers' equipment and energy use.

In addition, they passed up to $50 million in tax credits for people or corporations that donate to private-school scholarship funds and a tax cut of about $50 million for forest-land owners, according to a Budget and Policy Institute review.

Legislators also extended a few existing sales-tax exemptions. For example, swine-raising facilities will continue to pay no state sales tax on fuel they use, saving them about $300,000.

Cutting at least some of the 400 new jobs lawmakers approved and delaying the tax cuts would be one of the least painful ways to trim the budget, Harbin said.

Extending spending cuts to k-12 schools or eliminating this year's 2.5 percent pay raises for 200,000 teachers and state employees would be more difficult. Teachers are a strong political force in Georgia.

Tim Callahan, spokesman for the Professional Association of Georgia Educators, a teacher organization, said education has taken its share of budget hits in recent years.

"Educators and their families are facing the same difficult economic situation —- high gasoline prices, high grocery costs, declining property values —- as everyone else," he said. "Given that education has already endured $1.6 billion in cuts over the past several years ... one would hope that legislators would acknowledge that education has given and is giving enough."

Hill stressed that every dollar of increased spending that lawmakers approved for this fiscal year, which began July 1, is being looked at closely.

"I don't know what the future is for pay raises," he said. "That's new money. The easiest thing to suspend is a pay raise."

But Harbin said a lot of other cuts would be made before lawmakers seriously considered eliminating pay raises.

"Everything is on the table, but I don't know what's going to happen on pay raises," he said. "It's way too early to say we're taking back pay raises or anything like that."