Georgia officials are taking an ax to state agency funding and withholding tax cuts for homeowners as predictions for the state's expected budget shortfall reached into the billions Friday.

One Hall County lawmaker is predicting the budget cuts will be felt strongly in Northeast Georgia.
Gov. Sonny Perdue is cutting 6 percent from funding to state government departments starting immediately and will defer employee pay raises planned for January to deal with a predicted $1.6 billion shortfall this fiscal year, spokesman Bert Brantley said.

The delay in pay hikes does not include teacher pay raises, Brantley said. The state also will not dole out $428 million in homeowner tax cuts planned for this year, he said.

The only exceptions to the reductions are the state's Medicaid program, which will be cut 5 percent, and K-12 funding, to which will be cut just 2 percent, Brantley said.

The announcement came after a meeting Friday with legislative leaders to hammer out a plan for addressing Georgia's sputtering economy.

State Rep. Carl Rogers, R-Gainesville, did not attend the meeting, but said the move by the governor is yet another sign of the economic times.

Rogers said some state agencies may have to furlough some employees in order to meet the goals of the cuts. He predicted local assistance grants, such as state funds for the Northeast Georgia History Center and the Field of Dreams at Alberta Banks Park, could be in jeopardy.

Rogers also predicted the state would delay or postpone entirely the sale of bonds for long-term capital projects. Among the projects awaiting bond funds are design money for a major academic building at Gainesville State College and a new campus for Lanier Technical College in Dawsonville. Another state project, design funds for Don Carter State Park, could also be in jeopardy, according to the lawmaker.

"This is really tough," Rogers said.

Perdue had ordered state agencies to plan for a 3.5 percent cut but now he's asking them to prepare for between 6 percent and 10 percent, Brantley said. That likely will mean hundreds of new jobs will be cut and state spending on new capital projects will come to a halt.

"Just as many Georgia families are making sacrifices in this economy, our state must also seek out ways to stay financially healthy," Lt. Gov. Casey Cagle, a Chestnut Mountain Republican, said in a statement.

Mirroring national trends, Georgians appear to be responding to the bleak economic picture by spending less.

State tax revenues are down nearly 1 percent this fiscal year, which began July 1, Brantley said. That's after a year of lagging revenues that forced Perdue to use $600 million in reserves to make ends meets for last fiscal year.