March 28, 2013

State lawmakers agree on $41 billion spending plan

By BILL BARROW, Associated Press

ATLANTA — With little time to spare in their annual session, the General Assembly settled on a $41 billion budget for Georgia government.

The total includes $17.4 billion in state general fund money, plus at least $11.8 billion in federal tax dollars. There’s also revenue generated by the Georgia Lottery and other state agencies, including tuition at public colleges and universities.  

Each chamber adopted a compromise version of the document late Thursday evening, sending it to Gov. Nathan Deal. The Senate and House budget chairmen say all sides agreed to the details shortly before 3 a.m.

The final version looks fundamentally like what Deal pitched in January.

There are trims across many state agencies, including some that could lead to layoffs in certain offices. But increases in health care costs, projected enrollment increases for public schools and HOPE scholarships, along with new capital investments, mean that total spending for fiscal 2014 will increase over the current year.

Deal told lawmakers Thursday that they should be proud of the budget. House Speaker David Ralston called it a “prudent and conservative” document that “meets the needs of Georgians.”

The new fiscal year begins July 1.

The bottom line includes about $500 million more in state general fund money than the previous year. Federal funds increase as well, as do college tuition, money collected from “provider fees” imposed on Georgia hospitals and nursing homes and money that state employees contribute for insurance coverage.

K-12 education is largely spared from cuts. The main funding formula for public schools will get enough to maintain per-student spending even with projected enrollment increases.

Pre-kindergarten programs will get enough money to return to 180 days of instruction, after spending a two years at 170 days because of previous cuts. There’s more money for HOPE grants at technical colleges, a move that is paired with a separate plan to reduce the required grade point average to 2.0. It had been raised previously to save money, but Deal and Republican legislative leaders sided with Democrats who had complained for two years that the policy reduced access to higher education.

Both of those moves mean that Deal has restored cuts he imposed in the first budget that he signed after taking office.

Lawmakers entered the session’s final days having to reconcile small, but significant differences in the plans that had passed each chamber separately. Deal initially proposed cutting what the state pays most health-care providers to treat patients with Medicaid insurance. The House didn’t want those cuts. The Senate endorsed a smaller cut than what the governor proposed.  

The Senate, meanwhile, added additional support for charter schools, a favorite of Lt. Gov. Casey Cagle. It also added a list of capital projects financed by bonds. The bond authorizations will cover almost $400 million in renovation and construction at Georgia colleges and universities. There’s $50 million for deepening the Savannah River to allow for larger cargo ships at the port. And there’s money for several new public libraries and new equipment for libraries across the state.

Both chambers wanted to restore special grants to rural schools that Deal had eliminated from his spending blueprint. The grants are intended to help small systems with overhead costs that are harder to cover using a state funding scheme heavily influenced by enrollment.

In the end, the House got its wish to protect Medicaid providers, the Senate got most of its projects, rural schools keep their grants and charter schools get a new infusion of cash.

All that was possible because at the last minute, Deal gave lawmakers an additional $56 million from the state’s share of the national tobacco settlement. That will increase the annual tobacco settlement spending to almost $200 million, about $54 million more than this year.

The budget assumes that an appointed board at the Department of Community Health will impose a new “provider fee” on Georgia hospitals to generate about $241 million. The fee will replace a 1.45 percent tax on hospitals’ net patient revenues. The money is important because it is used to secure federal funds — more than $400 million — for the Medicaid insurance program.

Medicaid provides care for low-income children, disabled adults and some elderly Georgians, and it’s also a major source of revenue for many physicians and hospitals. It is a joint state-federal program, but Congress requires that states put up their own money in order to get federal support.

Lawmakers imposed the temporary tax in 2010 as other tax revenues plummeted because of the Great Recession. But it was set to expire June 30. The legislature didn’t want to lose the Medicaid money, but many Republicans were skittish about voting for anything that could be called a tax.

The governor proposed punting the financing details to a board of his appointees that already levies a similar tax on nursing homes. Getting that plan through the legislature was perhaps his key victory of the session.