ATLANTA — Georgia Gov. Sonny Perdue slashed $1.6 billion in state spending from the budget for the coming fiscal year, but is using some $1.1 billion in federal stimulus dollars to soften the blow of the budget cuts.

Perdue, a Republican, said the state will accept federal money for the unemployment insurance fund, saying it would cost the state far less than it would deliver in federal cash.

Perdue's revised spending blueprint calls for state employees to pay about 5 percent more for their health insurance. It will cut Medicaid money to hospitals and ax money for the state's cash-starved network of trauma hospitals.

Perdue said he is not optimistic about tax collections picking up soon. The governor said there was a surge in tax refunds for Georgia residents in February.