Deal unveils $19.8 billion budget

Gov. Nathan Deal on Thursday proposed a $19.8 billion status quo budget for the upcoming year that provides $800 million in construction projects but no new major programs. Nor does the plan contain cost-of-living raises for teachers, for the fifth year in a row, or for state employees, for the sixth year in a row.

Deal’s budget covers the heavy demands of a growing population while accounting for sluggish tax collections. But the governor offered an upbeat message to lawmakers during his annual State of the State address, promising better times amid a tepid economic recovery.

“I will not lead our state with a doomsday mindset, reacting erratically and hastily based on fear or ignorance,” Deal told legislators. “Instead, we will move forward with confidence.”

It was Deal’s third State of the State address but, when it came to finances, the 2013 speech sounded like those of 2012 and 2011: State government is still reeling from the impact of the Great Recession, but the economy is showing signs of a rebound. Even with a $550 million increase in the state budget next year, spending remains down more than $1 billion from where it was when the recession started affecting tax coffers in 2008.

The budget provides a crystal-clear blueprint of Georgia’s top priorities. And it is crucial to the lives of millions of Georgians, helping to fund the education of about two million students and health and nursing care for about 1.6 million people. It funds road improvements and prisons, economic development initiatives and cancer research, business regulation and water and sewer projects.

State spending wasn’t the only thing the governor talked about Thursday. He also called on lawmakers to strengthen ethics laws, urging them to apply any new rules to all elected officials — not just those who serve in state government.

But what lawmakers really wanted to hear was how the governor proposed to cover the huge and growing cost of Medicaid, the health care program for the poor and disabled, and fund enrollment increases in education.

Deal’s two budget plans — one for the fiscal year that ends in June and the next year — cut spending in most areas but add hundreds of millions of dollars to public health care programs.

They include more than $300 million to pay for growth in K-12 school enrollment and extra money to poorer school systems.

The higher education system would receive slightly more under Deal’s plan next year.

State employees and teachers didn’t get good news from Deal — he offered them no hope of a cost-of-living raise in fiscal 2014, and some agencies will have to reduce staff. Most state employees haven’t received a cost-of-living raise from lawmakers since fiscal 2008, and teachers since fiscal 2009.

Under Deal’s budget, which must be approved by lawmakers, the state would borrow about $830 million for construction and maintenance programs, including more than $400 million for new school and university facilities.

Two of the biggest college projects: $58.8 million for a new law school/humanities building at Georgia State University and $45 million for a cancer research building at Georgia Regents University in Augusta.

The spending plan also includes $70 million for water and sewer projects - including money for new reservoirs - $50 million for dredging the fast-growing Port of Savannah, and $11.75 million for the College Football Hall of Fame, which is relocating from Indiana to Atlanta.

The spending plan counts on lawmakers to pass legislation that would enable the state to continue collecting the “bed tax” — a fee hospitals pay to prop up the Medicaid system. The measure passed the Senate Thursday and is expected to win approval in the House. Without it, the state would have a hole of more than $600 million in its budget and likely be forced to drastically cut payments to doctors, hospitals and other health care providers.

The plan calls for millions of dollars in savings by moving the state’s elderly and disabled Medicaid recipients to a “care coordination” program. Exactly how the new program would work isn’t clear, but it’s likely that it would help these recipients with chronic problems get ongoing care so they can avoid high-cost emergency room visits.

The plan also eliminates Medicaid payments for elective deliveries of babies before the 39th week of pregnancy – which can lead to high neonatal intensive care costs for babies who are born too early.

Tim Sweeney, a health policy expert at the Georgia Budget & Policy Institute, said he is concerned that the governor’s plan does not allocate enough money to cover the growth of the Medicaid program.

“It does not appear that they have funded what the Department of Community Health said they needed,” Sweeney said.

Overall, Deal’s budget counts on a 4.8 percent rate of revenue growth during the upcoming fiscal year, similar to what the state saw during the first six months of this fiscal year.

“The goal I have set is to make Georgia the No. 1 place in the country in which to do business,” Deal said. “We are well on our way to achieving our goal.”

His budgets for the next 18 months, however, cut about $190 million in Regional Economic Business Assistance grants and the One Georgia program, which is designed to spur economic growth in rural Georgia. Chris Riley, the governor’s chief of staff, said that the state still has enough in the funds to attract businesses to Georgia.

Deal’s fellow Republicans praised his spending plan.

“Governor Deal presented a bold agenda during his State of the State speech that focused on improving our climate for job creation, identifying and utilizing efficiencies in our government and strengthening our public education systems,” said Lt. Gov. Casey Cagle.

Democrats said the state’s long-running budget problems stem from poor decision-making by Republican leaders, who they claim have been interested in little more than cutting spending during the past decade.

“The current administration has contributed its budget cuts to crucial programs, which undermine the path to full recovery and increase the hardship of Georgia families,” said Senate Minority Leader Steve Henson, D-Tucker. “Only by coupling strategic investments in the future with the revenue needed to pay for them will Georgia have a chance of building an economy that works for everyone.”