A state revenue shortfall of between $1 billion and $2 billion has left Gov. Sonny Perdue, state agencies and the legislature scrambling for ways to balance the budget.

Among the cost-cutting measures suggested by the governor is the elimination of the Homeowner Tax Relief Grant, a $428 million statewide program designed to reimburse local governments providing a homestead tax exemption.

In Newton County, axing the program could result in a loss of as much as $1.8 million in state funds the county has already included in its FY 2009 budget, according to John Middleton, administrative officer for the county.

The governor's call for budget tightening comes after FY 2008's third and fourth quarter revenues declined by 3.7 percent and 7.3 percent respectively, according to a report by the Georgia Budget and Policy Institute. In order to meet the FY 2009 budget, which the legislature passed this spring, the state's revenue stream would have to increase by $1.48 billion or 8.4 percent - a difficult task given the current economic climate.

In order to balance the budget, which the state constitution mandates, the governor has asked all state department heads to provide him with proposed 6 percent, 8 percent and 10 percent budget cuts to their agencies by Sept. 1, according to State Sen. John Douglas (R-Social Circle).

Douglas said he did not think the General Assembly would convene for a special session to balance the budget, but could manage until the legislature convenes again in January.

"That would just cost us more money and I personally don't think we need to have a special session," Douglas said, adding that the legislature would be working with the FY 2009 supplemental budget when it reconvenes. "Then we'll see where the revenue is and what [the governor is] going to need to do."

Douglas said he did not believe the General Assembly intended to go along with the governor's proposal to eliminate the Homeowner Tax Relief Grant.

"My personal view on that is that we would need to cut elsewhere," Douglas said.

If the grant, which allows homeowners to receive up to an $8,000 exemption on their county and school property taxes, is eliminated it would raise the property tax bills of county residents who currently receive the exemption by $245, according to Newton County Tax Commissioner Barbara Dingler.

In Covington, the homeowner credit is $304. It is $279 in Oxford and $257 in Newborn.

Dingler said property tax bills, which include the homestead credit, were mailed July 18, shortly before the governor called for the Homeowner Tax Relief Grant to be eliminated.

Middleton said the county was waiting to see what action is taken by the legislature, but is concerned about the possible $1.8 million cut in funding. The FY 2009 budget the county passed in June was $55.1 million, so a near $2 million cut is something to be taken seriously he said.

"I would think that if that becomes the case, we certainly would need to go through the budget in a very careful manner with all of our departments and all of our officials to determine how we could manage that," Middleton said. "We do take measures to try and continue those essential local government services."

Middleton said in the past the county has had to step up and fund programs like court systems, the health department and prisoner housing when the state has "not stepped up to its level of responsibility."

"It is a state-mandated property tax exemption, but it's just another example of the state looking to push the burden down to local government," Middleton said.

Dingler said if the county found itself unable to run operations without the $1.8 million, the county might have to re-bill property owners to make up for the funding shortfall. She added such an event likely would not take place until the legislature convenes again in January.

Covington City Manager Steve Horton said the city was also following the state budget proceedings. Horton said the city stood to loose $132,000 if the homeowner grant was eliminated.

"We're just going to have to see what he does," Horton said. "It is tough economic times across the board."

State Rep. Doug Holt (R-Social Circle) said the legislature will likely have to compromise with Perdue on some cost-cutting measures.

"There are some things we like, some things we don't," Holt said. "We realize this is a process of give and take. From what I've seen within the house, there is a desire to avoid cutting the Homeowner Tax Relief Grant if at all possible.

"Everybody's going to have to suffer a little bit of pain with this," Holt said. "We'll just have to spread it around as fairly as we can with the understanding that education and law enforcement are priorities overall."

To help with the cost cutting, members of the House of Representatives have agreed to forgo their special project grants or earmarks included in the FY 2009 budget. The Senate has yet to agree to do the same.

Sen. Douglas, who managed to secure a $200,000 special project grant for the rehabilitation of the Porter Memorial Gym in Porterdale, said he did not think the situation yet required the Senate to echo the actions of the House.

"We haven't gotten to the point yet where we think we need to do that," Douglas said, adding, "Everything is on the table and everything is up for discussion."

Douglas said some budgeted state employee pay raises might have to be postponed due to cost cutting.

"If we're going to have an across the board belt-tightening, then those pay raises are going to be looked at as well. We're going to have to tighten our belts equally all the way across," he said

The timing of the budget cuts does not bode well for a proposed expansion of the county's homestead tax exemption for seniors. In November, Newton voters will be given the choice to expand the existing senior exemption to $26,000 and to increase the per year income cap for qualifying seniors to $25,000.