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Governor’s budget plan dips heavily into rainy-day fund

ATLANTA — Gov. Sonny Perdue called on legislators Wednesday to look past the current economic downturn as he announced hefty budget cuts paired with new bond spending that he said will create 20,000 new jobs in the construction industry.

He also proposed changes in the way the state funds Medicaid, built on a new fee for hospitals and insurance companies, and a reorganization of the Georgia Department of Human Resources.

In his annual State-of-the-State address to a joint session of the General Assembly, Perdue rolled out two budgets: his amended fiscal 2009 budget and his proposed fiscal 2010 budget, which takes effect July 1.

For his amended budget, Perdue cut more than $2 billion from the spending that leaders approved during last year’s legislative session. Because of falling state revenues, there are hefty cuts for all state departments:

Ÿ nearly $492 million less for the Department of Education,

Ÿ $116 million less for the Department of Corrections,

Ÿ $201 million less for the Department of Human Resources,

Ÿ $219 million less for the Board of Regents.

The fiscal 2010 budget also is lower than the original fiscal 2009 spending plan, totaling $20.2 billion in state spending. The 2010 budget also includes fewer state employees — about 101,000 in total — and no raises for employees.

The cuts were as bad as feared in recent months, when Perdue asked agency heads to prepare plans to ax between 6 percent and 10 percent from their budgets. Cuts varied by department, but overall the governor chopped 10 percent from the fiscal 2009 budget.

Even with the cuts, both budgets include large dips into the state’s rainy day fund, which Perdue said sits at $1.2 billion. He proposed taking $400 million of that to help fund the 2010 budget and an additional $237 million to prop up the 2009 budget.

Now the budgets move into the General Assembly’s court, and legislators will start tinkering with them. Formal House hearings on the budgets are scheduled to begin next Wednesday.

BORROWING TO BUILD

As governors do each year, Perdue proposed new borrowing to fund state construction projects. He put $1.2 billion in bond funding in his budget, which the state would pay back over the next 20 years.

Those payments, including principal and interest, would total more than $1.9 billion, according to the state’s payment schedule.

The borrowing is, perhaps, less than some expected when he promised an “aggressive” bond package late last year. But Perdue said it’s 20 percent more bond spending than in recent years, and he said some projects could be sped up to create jobs sooner rather than later.

There are projects all across the state, including $15.65 million to complete the Department of Corrections’ new headquarters and training facility under construction at the former Tift College campus in Forsyth and $20 million for a new teacher education building at Macon State College’s Macon campus.

Though more money may be coming to Georgia through federal stimulus spending, Perdue said he did not include any in his budget because it’s not guaranteed.

Perdue said now is the time to spend for the state’s future, particularly given Georgia’s healthy reserves and strong bond rating, as well as the low cost of construction in a down economy.

“Don’t hear me dismissing the scope or severity of this downturn,” Perdue said. “But more importantly, don’t leave failing to hear the message that we need to look beyond this downturn.”

LEGISLATORS RESPOND TO CUTS

Democrats criticized Perdue’s budget, saying the cuts were out of whack with everyday Georgians’ priorities. House Minority Leader DuBose Porter, who represents Laurens County in the Legislature, said Georgia can’t move forward with this budget.

“Parents and teachers are calling for help for our schools, but instead we built boat ramps,” Porter said, referring to the governor’s “Go Fish” program, which was funded in previous budget years.

“In Georgia today, law enforcement is working overtime to keep us safe, and due to across-the-board cuts our law enforcement officers are stretched almost to the breaking point, but the majority party is building a multi-million dollar horse park in Houston County,” Porter said, referring to a park funded last year in Perdue’s home county.

State Sen. Cecil Staton, R-Macon, called the current budget climate “almost unprecedented.” Staton said Perdue seemed to take a “measured approach” with his cuts, though he had not fully digested the nearly 700 pages of budget documents released Wednesday.

Those who wish to criticize, Staton said, should come up with their own list of cuts.

Porter said Democratic analysts would be working through the budget this week. He said he is unsure whether an alternative proposal of cuts would be produced, but he said the party’s priorities are clear: education, job creation, family health care, public safety, developing a transportation plan and managing the state’s natural resources.

“There is no plan for transportation (in the governor’s budget), no funding for education and a new tax on hospitals,” Porter said.

CHANGES FOR MEDICAID, DHR

Perdue proposed a new 1.6 percent fee for hospitals and insurance plans to help fund Medicaid and PeachCare. That will help the state draw down the federal money it needs to avoid major cuts to the programs and increase reimbursement rates to health-care providers, Perdue said.

Perdue also said the change, along with tack-on fines for “super speeders,” will allow the state to put $60 million a year into trauma-care funding. That would help hospitals cover the cost of expensive emergency room operations and could improve the state’s emergency infrastructure in rural parts of the state.

Don Faulk, CEO of The Medical Center of Central Georgia, said he appreciates the governor trying to find answers on Medicaid and trauma funding, but he called the plans “a little disheartening.”

“All (the 1.6 percent fee) does is shift the taxing to the hospitals to tax ... the people who are already paying, not only for their own care, but the care for the uninsured,” Faulk said.

The governor also proposed a reorganization the Georgia Department of Human Resources, which oversees programs for the poor, children and the infirm.

Many of the department’s functions would be moved to the Georgia Department of Community Health, which would be renamed the Georgia Department of Health.

A new Department of Behavioral Health would be created to deal specifically with mental health and drug addiction programs now handled by the DHR, Perdue said.

The state’s mental-health services have been beset with problems, which led to an ongoing investigation by the U.S. Department of Justice.

State Sen. Robert Brown, who represents Macon as well as being the Democratic Party’s minority leader in the Georgia Senate, likened Perdue’s restructuring proposals to “moving the deck chairs around on the Titanic.”

“What we need to do is hire competent and caring people,” Brown said.

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