GEORGIA LEGISLATURE: Perdue insists property tax grants must go

Gov. Sonny Perdue told lawmakers on Wednesday that the state simply can’t afford to continue funding the property tax relief grants that save many homeowners $200 to $300 a year.

Perdue, who opened House and Senate Appropriations Committee hearings on the budget, said last summer that the grants weren’t meeting their goal of holding down property taxes.

But Perdue said Wednesday he recommended the end of the program because the state can’t afford the $428 million-a-year cost of the grants. The governor’s budget plan cuts $2 billion in spending this year.

“I could not find it [in the budget],” Perdue told lawmakers. “It became virtually fiscally impossible to fund $428 million in the homeowners relief grant. We wanted to fund it, but there is not the money to fund it.”

Perdue raised the issue during the first day of hearings because legislative leaders have already come out against his plan. If legislators keep the grants, they will have to come up with an extra $428 million on top of the $2 billion in spending cuts Perdue has proposed.

“There are no easy answers in economies like these,” the governor said.

The $2 billion shortfall is the largest the state has ever faced. When Perdue took office in 2003 facing a fiscal crisis, the shortfall was about $620 million.

Still, Perdue told lawmakers, “Things will get better. We don’t know when. That’s the challenge.”

The state’s fiscal economist, Kenneth Heaghney, was less optimistic. “We believe the economic situation is deteriorating,” he told lawmakers.

Heaghney said he expects the recession to continue through the first half of 2009 and that a weak recovery will begin in the second half of the year. However, he warned, a spike in oil prices or some other financial shock could delay a recovery.

The state is projecting a 4.4 percent drop in tax collections for fiscal 2009, which ends June 30. In fiscal 2010, the state is projecting about a 2.2 percent increase in tax revenue.

A proposed federal stimulus package could dramatically alter lawmakers’ budgeting plans, providing billions of dollars in funding for infrastructure projects, health care spending and other programs. However, Perdue said he didn’t count on any federal help when he developed his budget proposal.

Lawmakers will continue reviewing budget plans over the next two days. On Wednesday:

> Other legislators asked whether the state and school systems could save money by going to four-day school weeks, rather than the current five-day weeks.

State School Superintendent Kathy Cox told lawmakers, “I am not going to take anything totally off the table, depending on how bad this budget gets.”

But she said shorter school weeks have not been shown to improve student performance. And shorter weeks provide hardships for some families, she said. For instance, families in which parents work would have to find someone to watch their young children for an extra day.

“I am not thinking at this juncture that things are that dire,” she said.

> State Revenue Commissioner Bart Graham said cutbacks in his agency will mean slower processing of paper income tax returns this year. He said some returns could be delayed three months.

> Rep. Fran Millar (R-Dunwoody) suggested the state and local school systems could save money by furloughing non-teaching staff in public schools. Millar noted that many businesses are laying off workers, and many state agencies are giving employees days off without pay to save money.

> Several lawmakers raised concerns about Perdue’s proposal to eliminate the $30 million the state spends on school nurses. Legislators fear some school districts will not continue to pay for nurses if the state stops funding the program.