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Posted: January 13, 2011 5:30 a.m.

HOPE faces cuts in Deal budget

ATLANTA — Gov. Nathan Deal preached austerity in his first State of the State address on Wednesday, unveiling an $18.2 billion budget proposal that will mean deep cuts to the state's popular HOPE scholarship program and a slimmed down state workforce.

 Public college students are big losers in Deal's inaugural spending proposal. In addition to making cuts to the lottery-funded HOPE scholarship program, his budget would slash state funding to the university system by about 8 percent.

The Republican on Wednesday vowed to end teacher furloughs that have hit elementary and secondary schools but his budget would cut more than $700 million in education funding for the fiscal year that begins July 1. That could force local school districts to again make use of unpaid furlough days to keep costs down.

"We are now entering a new era of smaller government and personal responsibility," Deal told a joint session of the state Legislature on Wednesday.

"Government must pull back, but Georgians and our strong communities, big and small, have what it takes to fill the gap."

The state faces a $1 billion budget shortfall for the coming fiscal year, largely because it will see federal stimulus dollars dry up.

The Republican-controlled Legislature must approve Deal's spending blueprint and will almost certainly make changes during the 40-day legislative session.

Deal — a former congressman who ran as a fiscal conservative — has proposed eliminating 14,000 positions from the state workforce. Most of those positions are already vacant, left open through attrition. Deal aides said there would be some layoffs and estimate the number at fewer than 200.

Health care also takes a big hit in Deal's spending plan. He's proposed eliminating dental and vision benefits for low-income Medicaid recipients and cutting by 1 percent the state's Medicaid reimbursement rate for physicians, dentists and pharmacies. His budget would also boost co-payments for children age 6 and up enrolled in the state's PeachCare program for low-income children Those copays would rise from 60 cents to $3.40 for outpatient services and $12.50 to a maximum of $55.45 for inpatient.

Borrowing for capital projects would plummet by close to 50 percent under Deal's spending plan. His predecessor, Republican Sonny Perdue, had budgeted about $1 billion a year in bonding for infrastructure projects. Deal trimmed that back to about $563 million.

Deal would provide $46 million in borrowing for new reservoirs, designed to help the state show it's serious about resolving it's long-standing three-state battle over water. He would also borrow $32 million to deepen the port in Savannah.

Deal spent much of his speech talking about the importance of education, and school leaders said they were encouraged to hear him say he wanted to end furloughs and completely fund a full school year.

"Now we'll just have to see the details of his budget and see if we can make the rhetoric match the reality," said Tim Callahan, spokesman for the Professional Association of Georgia Educators.

Angela Palm with the Georgia School Boards Association said his focus on the issue could provide a boost to cash-strapped districts. "Just the importance he's placed on education should help," she said.

Without an infusion of state cash, though, the state is looking at deep cuts to its popular HOPE scholarship program, which provides public college tuition to students who earn a B average or better.

Rising tuition and enrollment have outpaced lottery revenues and the program is about to go broke. Deal has pledged to preserve HOPE but again on Wednesday did not offer any specifics on how he would do so.

House Democratic Leader Stacey Abrams said lawmakers should hear from struggling families affected by potential cuts to HOPE before any decisions are made on its future.

"The issue of what's going on with HOPE is a conversation that must begin in communities," she said, laying the blame for the program's crisis squarely at the feet of Republicans who now lead the state.

"We must save HOPE from the Republican policies that have cut higher education and shifted the costs to the HOPE scholarship," she added.

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