State officials relieved as budget year ends

ATLANTA - Georgia appears to have dodged the financial problems that forced other states to balance budgets with deep cuts and higher taxes, but top money-managers aren&#39;t breaking out the champagne yet. <br> <br> Final figures are expected to show that Georgia ended the 2001-2002 budget year this weekend in the black, as required by law, and without dipping into its reserves. <br> <br> Sitting in an office stuffed with charts, financial reports and predictions about future growth, Henry Thomassen - the governor&#39;s chief economic adviser - continues to worry. ``Do we dare count on a recovery that&#39;s strong enough to push us up?&#39;&#39; <br> <br> Like many states, Georgia watched tax collections sag month after month. As of a few weeks ago, Georgia&#39;s collections were down $674 million from the year before. <br> <br> By dipping into a surplus accumulated in the previous year, using debt rather than cash for a school construction program and forcing state agencies to cut spending, Georgia was able to offset the most troublesome effects of the national downturn. <br> <br> Thomassen says there will even be a modest surplus when the books are finally closed on the year. <br> <br> That will help finance the new budget that runs from July 1 to next June 30, but when that expires there is no expectation of leftover funds to help finance the next spending plan. <br> <br> ``If the rate of growth in revenue isn&#39;t as rapid as the expenditure, the gap still gets wider,&#39;&#39; he said. <br> <br> That means when legislators come back to the Capitol in January to write the budget for next year, they could be facing a much more complicated problem - one that involves both slow or little revenue growth as well as rising costs in areas like the state&#39;s Medicaid program of health care for the poor. <br> <br> ``Health care costs are increasing right now at about four times the rate of other costs. We cannot continue at that rate,&#39;&#39; said Bill Tomlinson, the governor&#39;s chief budget aide. ``If supply and demand begin to meet, we have to slow down the demand, the curve. That&#39;s going to be the challenge.&#39;&#39; <br> <br> At this point, Democratic Gov. Roy Barnes, who faces a Republican re-election challenge in November, has gotten high marks for managing state government during the recession. Moodys Investor Services, a bond rating agency, again gave the state a triple-A rating - its highest - in April, citing ``the state&#39;s history of conservative fiscal management.&#39;&#39; <br> <br> ``I would say he was dealt a difficult hand and played it relatively well,&#39;&#39; agreed economist Jeffrey Humphreys, director of the University of Georgia&#39;s Selig Center for Economic Growth. ``And I didn&#39;t even vote for the guy (in the 1998 primary),&#39;&#39; he added. <br> <br> But some Republicans wonder if in choosing the budget strategies he followed this year, Barnes merely postponed the state&#39;s day of reckoning until after the Nov. 5 election. <br> <br> ``Roy Barnes has been so political that I think a lot of people just suspect everything of being political,&#39;&#39; said Rep. Lynn Westmoreland of Sharpsburg, the House Republican leader. ``Yeah, he could be saving the hard stuff &#39;til after his re-election.&#39;&#39; <br> <br> Rep. Larry Walker of Perry, the House Democratic Leader, disagreed. <br> <br> ``On the state level, we did exactly what people do in their personal lives. When things were good, they try to save money so they&#39;ll have a little cushion in hard times. I think it&#39;s remarkable how well we&#39;ve done. If we&#39;d had to cut the budget, the Republicans would say, `You&#39;re not managing the budget right.&#39; You can&#39;t win with them.&#39;&#39;