Deal warns of cuts, promises progress in first State of the State

Also, while Deal pledged to cut 14,000 positions, almost all of those jobs are vacant, and few state workers will actually be laid off.

Deal's speech focused largely on the economy and his first executive budget proposals, but the governor also detailed many of his top priorities, including a promise to spend millions on new reservoirs and millions to deepen Savannah harbor.

"It is comforting to know that the things which truly define who we are as a state and a people have changed very little in 126 years," Deal said, referring to how the state was described in an 1885 publication. "With regard to our state budget, however, it must be adjusted to reflect the financial realities of today. Those realities, unlike the natural resources of our state and the character of our people, are constantly changing, and the budgets I submit to you today reflect those changes."

Deal's midyear budget -- which will take the state through June 30 -- would increase $163 million. Almost all of that would come from reserves and pay for increases in school enrollment.

The budget for fiscal 2012, which starts July 1, would be $18.16 billion, up $273 million from this year.

The governor's budget proposals will serve as a starting point for lawmakers, who will ultimately write and approve the spending plans.

The state’s economic development agency gets a boost in funding in Deal’s plan, and more would be spent housing inmates in private prisons. But education gets hammered, in part because of the loss of federal stimulus funding.

In his speech, Deal said both budgets make k-12 education funding "a top priority."

"Let me be clear: My budget will end teacher furloughs and keep students in school for a full school year," he said. "I view education as our No. 1 economic development tool, and there is no more forward-looking or strategic place to invest."

School officials knew the federal stimulus money would run out this year, and most of it had been plowed into programs for low-income children. Under Deal's budget, school transportation and nurse funding would be among the areas cut.

Still, educators were cautiously optimistic.

"It’s certainly heartening to hear him say he’s going to try to end furloughs and fund an entire school year,” said Tim Callahan, spokesman for the Professional Association of Georgia Educators. “We’ll just have to see if the fiscal reality allows for that rhetoric to be true. The federal funds are going to drop off a cliff, and I think school systems are going to find it hard to replace those.”

State university programs would see their funding cut about $300 million over the next 18 months under Deal’s amended 2011 and 2012 budgets. Technical colleges would take a substantial hit as well. In an interview Wednesday afternoon, Deal told The Atlanta Journal-Constitution that was intentional.

Colleges, he said, are "going to take about a 6 percent reduction. I did not feel that they had the same priority as k-12."

State higher education officials said they have anticipated that cuts would be coming.

The cuts to the University System would bring the system’s budget for fiscal 2012 down to about $1.74 billion -- a figure last seen during the 2005 fiscal year, when the system enrolled about 250,600 students, said Usha Ramachandran, vice chancellor for fiscal affairs. The system projects to have about 321,000 students next fall.

On the HOPE scholarship, Deal said his budget will not allow HOPE grants to exceed what the lottery takes in and called on lawmakers to find a way to resolve the discrepancy. Funds for college scholarship programs -- including HOPE -- would be cut $279 million next year. Deal’s budget plan doesn’t explain how those cuts would be made. Funding for pre-kindergarten classes would also be cut, although Deal's budget projects the same number of children attending pre-kindergarten classes.

More than 100 positions would be cut from the department that hands out driver’s licenses. The governor’s budget eliminates funding for the sports and music halls of fame in Macon and the aviation hall of fame in Houston County.

Families on the federally subsidized PeachCare for Children health care program would have to make higher co-payments for doctor's visits and in-patient treatment for anyone age 6 and up in the program. And doctors, pharmacists, psychiatrists and dentists would see Medicaid payments from the state drop 1 percent.

The fiscal 2012 budget includes $245.7 million in bonds for new school construction and buses. Universities would get $81 million in bonds, far less than in past years.

As notable as what was included in Deal's speech was what he did not mention. While the address was almost completely about the budget and economy, the governor made no mention of the report issued last week by the special tax council commissioned by lawmakers to recommend wholesale changes to the state tax code. That report, which included Deal's campaign promise to lower corporate income taxes, also recommends adding the state sales tax to groceries.

Deal also made no reference to the coming legislative fight over immigration, although during the campaign he was a vocal supporter of an Arizona-style law to combat illegal immigration.

And while Deal again promised to rescue the HOPE scholarship program, he did not provide specifics as to how that would be accomplished.

Still, Democrats agreed with some key themes in Deal’s speech, especially when focused on rebuilding roads and water and sewer lines.

But the question remained how those funds would be spent and who would be responsible for them being spent correctly.

“I find it encouraging that he is focusing on the priorities of infrastructure and education,” said House Minority Leader Stacey Abrams, D-Atlanta. “The devil is going to lie in the details.”

Democrats are especially concerned about preserving the HOPE scholarships, since they created and funded it and the pre-k program that are under threat of shortfall.

Still, there are other areas where Democrats and Republicans may work together. Abrams added she was pleased to hear Deal discuss working on the public safety budget, shifting money from how the state incarcerates prisoners to looking at diversion programs for drug offenders or others.

“Whether an idea comes from a Democrat or Republican, if it’s a good idea, we’re going to tackle, it,” Abrams said.

Staff writers Nancy Badertscher, April Hunt, Laura Diamond and Jim Galloway contributed to this article.

BUDGET HIGHLIGHTS

These are from Gov. Nathan Deal's budget proposal for fiscal 2012, except for the University System cuts: