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Stretching the state's budget

Georgia is one of 41 states battling a growing budget deficit

POSTED: January 4, 2009 12:30 a.m.

If you hear a governor talking about the most challenging state budget in history, you can take your pick of any of 41 chief executives who face budget gaps of a combined $42 billion on their fiscal year 2009 spending plans.

Georgia, with an estimated $2 billion deficit, is among them.

When the Georgia General Assembly convenes for its 2009 session on Jan. 12, lawmakers will have to whittle down the current budget and determine what programs and projects can survive in the next year.

In all but a handful of states, that list already is growing shorter, resulting in fewer health benefits for the poor, the closure of parks and recreation centers and more inmates being crammed into ever more crowded prisons.

Demand is simultaneously on the rise for Medicaid, food stamps and unemployment benefits even as the delivery of these and other services is complicated by a shrinking state work force.

"This is shaping up as the worst year for the states since the (Second World) War," said Arturo Perez, a fiscal analyst for the National Conference of State Legislatures.

Last year, Gov. Sonny Perdue ordered state agencies to prepare cuts of 6, 8 and 10 percent. Now the legislature will make the cuts official when they amend the 2009 budget and write the 2010 plan.

State agencies, such as the Department of Natural Resources, have proposed privatization of facilities, such as the Smithgall Woods Lodge in White County, as a step toward saving tax dollars. Other parks and some state golf courses could be closed either seasonally or completely.

Lanier Technical College has already adopted a four-day week for all of its operations.

The challenge facing governors will be made easier by a federal stimulus package that President-elect Barack Obama has said would deliver hundreds of billions of dollars in transportation and infrastructure funds.

Perdue, during a visit to Gainesville in December, said he is not basing his plans for the state in 2009 on mere prospects of help from the Obama administration.

"I’m hopeful," Perdue said, "But I don’t intend to govern Georgia based on what’s coming from Washington. I think we better be smart in our business decisions and we’ll have a balanced budget before any stimulus package is announced."

Perdue, along with other governors, met with the president-elect in Philadelphia. He said he hopes any offer of federal help will be the right plan.

"Hopefully, the president-elect and Congress will create a program that invests, that just doesn’t throw money at poor decisions and invest in projects that have a real return for the future."

Perdue will propose a slate of new infrastructure projects to help lift Georgia out of the economic doldrums by putting people to work.

The governor plans "an aggressive bond package" to fund things like road construction and new school facilities.

While the recession has left Georgia in a cash flow crunch, Perdue said the state still leverages a solid balance sheet and AAA bond rating.

"We’re cash poor, but we have good credit," Perdue said.

However, that will not eliminate the likelihood of significant cutbacks in many services.

"Ultimately, it gets us back to what is government here for," said state Sen. Mitch Seabaugh, R-Newnan, who sits on the Appropriations Committee.

Lt. Gov. Casey Cagle believes that the state of Georgia can rebound from the current recession in good shape.

"With all of the economy downturns and the climate we find ourselves in, Georgia is not exempt," Cagle said. "Georgia is very resilient, and we have worked through these difficult times in the past. And we will work through these difficult times now."

Cagle said he had been given few details of Perdue’s plan for bond projects. That will likely come when the governor presents his annual "State of the State" address during the opening days of the session.

State Rep. Tommy Benton, R-Jefferson, who represents the southeastern portion of Hall County, said the cuts being proposed now will be painful.

"I’m concerned because about five years ago we cut most of the fat out," Benton said. "Now if we start cutting, we’re going to get into meat and muscle and it’s going to impact local school systems."

Benton said in Jackson County, taxpayers are bearing 49 percent of the cost of the school system. He thinks the model ratio is 80 percent state and 20 percent local. In Barrow County, the other county represented by Benton, taxpayers are paying a 51 percent share.

Also likely to fall to the budget ax are local assistance grants, direct payments to counties and cities from the state for projects ranging from sidewalks to sewers. Those funds were placed on hold in the current budget.

"Cities and counties are very concerned about how they’re going to fund their projects and do what they need to do," said state Sen. Lee Hawkins, R-Gainesville.

Also a point of funding controversy will be the Homeowner Tax Relief Grant, which reimburses counties for revenues lost through homestead exemptions on property taxes. Perdue has looked at cutting the program next year to help alleviate the state’s $1.6 billion deficit. That would leave Hall County with its own $2 million deficit and mean increasing the property tax $200 for every household.

State Rep. James Mills, R-Chestnut Mountain, is a vocal supporter of keeping the Homeowner Tax Relief Grant in place.

"I intend to maintain that," Mills said. "Property taxes continue to be the biggest burden."



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