Education, health care funding may be at risk

ATLANTA --- A continuing decline in state tax revenues could threaten Gov. Sonny Perdue's promise to spare education and health-care programs from the budget ax, he said Wednesday.

Mr. Perdue also said he would likely end up drawing about $600 million out of the state's $1.5 billion reserve fund to balance the budget for the spending year that ended June 30.

As he announced that state tax collected for the year slipped by 1.1 percent, the governor stressed that he still hopes to shield education and taxpayer-funded health insurance programs such as Medicaid from the 3.5 percent budget cut he has ordered agencies to prepare for the year that began July 1.

"It's my preference to continue the investment that we've made and increased in education and in health-care efficiencies," Mr. Perdue said.

But if state revenues don't improve after tumbling 9.4 percent in June compared to the same month a year ago, "then we'll have to look at all those options," he said.

Mr. Perdue blamed the falling state numbers on the sluggish national economy.

As for other parts of the budget, Mr. Perdue indicated the cuts might have to go even further than his original instructions. In addition to the 3.5 percent cut for the current fiscal year, he told agencies to come up with ideas for a 4 percent reduction in the 2009-10 spending year.

The governor said Wednesday that his administration could draw on lessons from a similar budget downturn as he took office in 2003.

"This isn't our first rodeo at this, and we're going to do what it takes to live within the means," he said. "And we'll do it in a very precise way."

When the books are closed, Mr. Perdue said, the state will likely end up about $600 million short of having enough income from the 2007-08 fiscal year to cover the spending approved by the General Assembly, leading to the withdrawal from the state's reserves.

In a statement issued by his office, Lt. Gov. Casey Cagle endorsed looking at ways to slim down state spending in the face of the declining income.

"It is vital that we manage our state in a manner that maximizes cost-saving measures and is even more efficient in the delivery of services," he said. "Now is the time to drive down costs and focus our efforts to do more with less."

Reach Brandon Larrabee at (678) 977-3709 or brandon.larrabee@morris.com.