MIAMI, Jan. 3 (UPI) -- Four southern state governors and their legislatures may find a little change to jingle in their pockets as fiscal 2003 hits midstream, but like the rest of the southern states that are already counting pennies, they are acutely aware that by the time the year ends, those pockets could be empty or nearly so.
Florida, North Carolina and Tennessee report a balanced budget going into the calendar year, and Alabama's deficit is only $5 million. Although they register balanced budgets for this fiscal year, nearly all of them are looking for new money to fund upcoming budgets or examining their prospects for increased funding for the 2004 fiscal year beginning July 1.
But already, in Virginia, Georgia, South Carolina and Mississippi, lawmakers are certain deep financial water awaits their 2003 legislative sessions as the result of the nation's sluggish economy.
Virginia's deficit at this point is a whopping $950 million of a $23 billion budget. The nearly $1 billion trails only California's eye-popping $6 billion gap nationwide.
Virginia Gov. Mark R. Warner is recommending cuts in the Medicaid program for the poor and elderly, a step that is popular among nearly all of the under-funded states. There are no new taxes in Warner's plans, and he hopes to pick up $64 million in improved tax collection.
Warner says he will generate $83 million by halting the increase of spending in the Medicaid program. That will include freezing reimbursement rates for hospitals, nursing homes and health maintenance organizations.
The Medicaid cuts drew sharp rebukes from nursing-home officials who predict that the lack of funding will cause severe staffing problems for care of the frail, poor and disabled.
"While we acknowledge that addressing our budget shortfall without additional revenues will force painful cuts to core services, balancing the budget on the backs of frail citizens is not the solution Virginia should pursue," Stephen C. Morrisette, president of the Virginia Health Care Association, told the Times-Dispatch in Richmond.
Warner earlier had shut down a dozen Department of Motor Vehicles offices, and prosecutors in Virginia Beach no longer take domestic abuse cases unless they reach the level of felonies. The rest will be dismissed.
The Democratic governor's adjusted budget is expected to be passed by a Republican Legislature that is hostile to new taxes. The 2003 session convenes Jan. 8.
Virginia is among 31 states reporting shortfalls, but it is not among the 23 that have responded by raising taxes.
Unlike Virginia, Georgia has a law mandating that Medicaid bills must be paid, and Gov.-elect Sonny Perdue is looking elsewhere for places to cut spending. Answers won't be forthcoming until budget hearings next month.
About half the births and 80 percent of the nursing home care in Georgia are financed by Medicaid, the joint federal-state program providing healthcare for the poor and disabled and children of the working poor. The state's share of the program has doubled to $1.6 billion in the last decade, and costs of Medicaid and other major programs have skyrocketed by 13 percent in just the last year.
Outgoing Gov. Roy Barnes already has ordered state agencies to reduce spending by 5 percent across the board just to cut deficits during the fiscal year that ends next summer. That might not be enough, however, to close the $450 million gap in a $16 billion budget.
And the 2004 budget is expected to wipe out the state's $900 million rainy day fund. The Legislature will start to work on the problem when it convenes Jan. 13.
"It's going to be a real struggle to hit revenue growth of the 3 percent the current state budget is based on," says Hank Huckaby, budget director for Perdue's transition team. "The downturn has lasted longer than anyone thought, and we are coming out of it very slowly."
In South Carolina, the Legislature convenes Jan. 14 facing a deficit Republican lawmakers peg at $400 million. Gov. Jim Hodges, who lost his job to Republican Mark Sanford in November, has submitted a final budget of $16 billion that hinges on increases in cigarette and gasoline taxes.
He said it will raise $295 million extra. The irony is that Hodges killed the cigarette tax hike in the Legislature last year, and he campaigned against the gasoline tax.
He said he expected the Legislature to support about 75 percent of the budget, and Sanford to support most of it also. Sanford isn't so sure.
"He's pinning the tail on -- in this case -- not the donkey but the elephant," Sanford said.
Sanford campaigned on a proposal to eliminate the income tax by raising gas taxes.
Hodges said the cigarette tax would generate $171 million that he would use for Medicaid.
Support for the cigarette tax has been emerging among both Democrats and Republicans in the Legislature, and Hodges expects it to pass.
In Mississippi, the Legislature won't have the Medicaid program to cut. They did that last year, and they might have to shore up some programs when the session begins Jan. 7.
The state has a $3.6 billion budget, and is looking for an addition of $104 million. It's an election year, so even a tax increase on casinos or cigarettes is seen as unlikely.
So far there are no solutions.
Florida's budget for this fiscal year is balanced, but that is expected to be blown apart in fiscal 2004 by educational requirements. First of all, the voters in November approved a constitutional amendment reducing class sizes in all the public schools in the state. That means more schools and more teachers.
Current estimates of the price tag are $628.2 million. An additional $351.75 million will be needed for the 67,555 new students projected in kindergarten through the 12th grade next year.
Those costs would be shared by the state with the local school boards that would include $706.4 million.
All that would force the state to ignore critical increases for Medicaid and the troubled Department of Children and Families.
Secretary of Education Jim Horne also will ask the Legislature for a 7.5 percent increase in tuition at the state's universities and give the schools the discretion to raise it another 5 percent. Scholarships and prepaid tuition programs also would be cut back.
There is talk of having to increase taxes, but Republican House Speaker Johnnie Byrd says there is no way that's going to happen.
There's plenty of time to think about it because the Legislature doesn't crank up until March.
Education is also the problem in Tennessee, whose Legislature gets going Jan. 14. A lawsuit to equalize teacher salaries throughout the state is the problem for the 2004 fiscal year.
If the teachers are successful as expected, the Legislature will have to come up with $400 million more to balance the state's 2004 budget.
The Tennessee General Assembly is expected to consider consolidating some departments to save money and cut back some services instead of establishing an income tax.
Public opinion against the tax is solid, but it did manage to come to a vote in the House last year and failed. After that happened, the Senate didn't bother to take it up.
On the bright side -- financially at least -- Tennessee voters approved a state lottery Nov. 5. The money will be used for scholarships and other education practices, but lawmakers haven't even gotten a start on enabling legislation.
North Carolina's $14.3 billion budget is balanced for the 2003 fiscal year ending June 30, but lawmakers say they need an additional $1.5 billion for the next budget after they go to work Jan. 29. Many of them campaigned on the notion that cutting waste and eliminating abuses will make up the differences, but skeptics say that is impossible and without new taxes, spending might have to be cut by 10 percent in all agencies.
Alabama's budget is the South's most trouble-free. A $25 million settlement with Amoco on underpayment of natural gas royalties will help, and there is extra money in a $248 million rainy day fund. The Alabama Legislature has some time to think about the 2004 budget because it doesn't convene until March 4, the same day as the Florida Legislature.
