The Union Recorder

Local News

January 16, 2013

Weaker-than-expected recovery hampers Ga. budget

ATLANTA — A weaker-than-expected economic recovery has proved a drag on Georgia's state finances, creating budget problems that Gov. Nathan Deal must address in his spending plans Thursday.

Legislators have approved a roughly $39.5 billion budget for the fiscal year ending in June on the expectation that state revenues would grow 5.2 percent over last year. However, a sluggish recovery has created a two-fold problem. First, the state is not collecting as much money as anticipated. Second, spending on government-run health insurance programs for the poor has increased.

Republican leaders say they are unwilling to raise taxes to offset the slump, an alternative to cutting the budget.

"That means we must make necessary cuts in other agencies and core functions of government since raising taxes is not an option that I will accept," Deal, a Republican, told business leaders in a speech Wednesday.

House Speaker David Ralston, R-Blue Ridge, and Lt. Gov. Casey Cagle on Wednesday endorsed a plan from Deal meant to keep hundreds of millions of dollars in Medicaid funding for the health care system. That funding would otherwise disappear when a so-called hospital bed tax expires in June. Georgia uses the $230 million it receives from the tax to secure an additional $400 million in federal funding for the Medicaid insurance program, which covers the poor. The money is then repaid to hospitals through a higher payment rate for treating Medicaid patients.

Some Republicans and anti-tax advocate Grover Norquist, president of Americans For Tax Reform, have said renewing the tax would violate anti-tax pledges. Deal tried sidestepping the issue this week by proposing legislation that would give the Board of Community Health the authority to levy the tax. A Senate committee gave the plan an initial vote of approval Tuesday.

"I've been informed that from 10 to 14 hospitals will be faced with possible closure if provider fees do not continue," said Deal, who is scheduled to release his budget plan and give the State of the State address Thursday. "These are hospitals that serve a large population of Medicaid patients."

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