published Wednesday, March 4th, 2009

Perdue again slashes Georgia’s state budget

By Shannon McCaffrey

The Associated Press

ATLANTA — Gov. Sonny Perdue said Tuesday he will draw on more than $1 billion in federal stimulus dollars to help the state dig out of a deepening deficit for the coming fiscal year.

Beset by plummeting tax collections, Perdue ordered deep new cuts Tuesday to state spending, but said the financial picture would have been far worse without the federal dollars.

Even with the stimulus cash, Perdue’s blueprint for the fiscal year that begins July 1 is already cutting back from his plan in January. He said Georgia’s state employees will be asked in January to pay 5 percent more of their health insurance costs. And he said another $69 million will be cut from state agencies which have already slashed budgets.

Hospitals will be hit particularly hard. Facing stiff opposition from members of his own Republican Party, Perdue on Tuesday abandoned plans to charge hospitals and health insurance plans a fee to help pay for soaring Medicaid costs.

Instead, hospitals will be slapped with $186 million in cuts to Medicaid provider fees. The governor also axed $37 million from the state’s cash-starved network of trauma hospitals.

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The governor’s revised spending plan cuts the state’s revenue estimate by $1.6 billion from the $20.2 billion that he had previously budgeted for the year.

Perdue also said Tuesday he will accept federal stimulus money for the state’s unemployment insurance fund, an issue that had been in doubt after he suggested that accepting the money might tie the state to increased spending down the road.

Perdue said Tuesday that the state would need to shell out about $1 million but would see an infusion of about $150 million in return.

State Labor Commissioner Michael Thurmond said the money will help keep the fund afloat amid soaring unemployment rates in the state.

Among the other federal stimulus dollars, Perdue’s budget uses some $527 million in additional Medicaid cash, $427 million for education and $7 million for foster care.

But even as he embraced the stimulus money, the governor cautioned that it comes at a cost.

“We don’t believe this is free money; somebody is going to have to pay this back,” Perdue told reporters at the state Capitol.

Perdue said Tuesday he’s not hopeful the state’s tax collections will pick back up soon.

He said the state Department of Revenue issued 48,000 more tax refund checks in February than it the in same month a year ago. That suggests Georgians are filling out their returns quickly.

“They need the money,” he said.

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