Politics & Government

New deal hinging on federal aid money saves homestead exemption for this year

ATLANTA — With federal stimulus money providing some breathing room in the state budget, Gov. Sonny Perdue announced a deal Tuesday to fund a property tax break for homeowners this year, avoiding a statewide round of re-billings.

The deal hinges on hundreds of millions in new money from the federal government to shore up the state’s Medicaid program, as well as new cuts for state agencies that have already lopped as much as 10 percent from this year’s budgets.

But it will keep local governments from sending out new tax bills asking homeowners for an extra $200 to $300 apiece, on average, to cover a tax break included on 2008 bills. Also, the deal will all but assure that the state won’t fund the property tax break again this year or in the near future.

Perdue’s signing of the enacting legislation, House Bill 143, sets up new state revenue thresholds before the state can fund future Homeowner Tax Relief Grants. Local governments essentially use that money to fund larger homestead exemptions on residents’ primary homes, and protecting the grant this year was a top priority for House and Senate leaders.

The new thresholds likely will mean a property tax increase for homeowners when 2009 bills go out this fall, though local governments could conceivably cut their own spending instead.

Perdue also announced Tuesday that he’s lowering the state’s revenue estimate for fiscal 2009 by another $450 million. Combined with previous cuts, that means the state now expects to bring in some $2.65 billion less this fiscal year than it budgeted during the last General Assembly session.

The governor said he’d wait a little longer to finalize the fiscal 2010 revenue prediction and see if additional cuts are needed in that budget, which takes effect July 1.

The federal stimulus package signed Tuesday by President Obama eased what could have been an even more difficult budget situation for the state. Perdue said there’s about $460 million in extra funding in the bill for Medicaid, a state and federally funded program that provides health care for some 1.8 million Georgians. That extra money “frees up” state funding, Perdue said.

Billions in other federal dollars are expected to be spent in Georgia, but just how that will affect the state’s budget — outside of Medicaid — isn’t yet known, Perdue said. He has appointed a deputy chief financial officer to oversee the state’s management of stimulus money in a way he called “both efficient and sustainable.”

As U.S. Sen. Johnny Isakson noted Tuesday in a visit to the state Capitol, the stimulus is a one-time spending package, not a new source of annual funding.

There’s money in the bill for transportation and transit projects, but the state Department of Transportation said it was trying to determine Tuesday exactly where that money would be spent. The same held for other state departments.

“That $465 (million) is all we can really count today,” Perdue said. “There will be additional money. We just have to sort through all the rules and regulations.”

The White House released several summaries Tuesday explaining the package, and they included numerous line items that may affect the state budget and will definitely mean a lot more government spending in the state.

The White House said its package would create or save about 107,000 jobs in Georgia and include:

Ÿ $53.6 billion nationwide for schools, including money to avoid layoffs.

Ÿ $2.1 billion nationwide for pre-K programs.

Ÿ $17 billion nationwide for public transit and high-speed rail systems.

Ÿ $40 billion nationwide to upgrade roads, bridges, ports, rail and water systems.

Ÿ $2 billion nationwide for community health centers.

Ÿ $1 billion nationwide to help people pay for flu vaccines.

Ÿ Various tax credits for individuals, including one to help people who lose their jobs to afford health insurance through COBRA and another to help people pay for college.

To balance the state budget, Perdue had already authorized heavy spending cuts, and hundreds of millions of dollars have been taken from state reserve accounts.

Another $131 million in department-by-department cuts as well as an even deeper dip into reserves will now be used to shore up the budget and fund the Homeowners Tax Relief Grant, Perdue said Tuesday. The grant alone costs the state $428 million.

Perdue said funding for some state agencies already has been cut to the bone, even before Tuesday’s cuts were announced. Some departments, including the Department of Human Resources, the Technical College System, the Department of Corrections and the Juvenile Justice Department, have already furloughed employees or drawn up plans to do so.

Perdue said he wasn’t sure whether Tuesday’s cuts would lead to more furloughs. He said he plans to meet with agency heads to decide how best to implement them.

To contact writer Travis Fain, call 361-2702.