ATLANTA — Georgia's hospitals and health-care providers were hammered as part of a new round of cuts proposed by Gov. Sonny Perdue on Thursday to deal with a gaping budget shortfall.



With state tax collections in freefall, Perdue is pushing to cancel the state's weeklong sales back-to-school sales tax holiday. Georgians will also face a host of new or increased fees totaling some $96 million as the state scrambles to balance its books.



Perdue told a state Capitol news conference that the state is undergoing "a government reset."



"We're taking a step back from a lot of things that were nice to do in good times," the Republican governor said.



The bad budget news has been expected since February's revenue numbers dipped for the 15th straight month. Perdue on Thursday lowered the revenue estimate for the fiscal year that begins in July by $443 million, effectively giving legislators fewer dollars to spend. The budget will drop from $18.2 billion to $17.7 billion.



The governor brought the current fiscal year's books out of the red by moving forward $342 million in federal stimulus dollars that he has intended to spend next year.



The new cuts rippled throughout state government. Many state agencies that have already endured round after round of reductions will be asked to slash another 3 percent from their spending. There are a few exceptions, such elementary and secondary schools and the department of corrections, which won't be cut as much.



But hospitals, that had been protected so far from Medicaid cuts, were hit hard in Perdue's new blueprint.



Hospital officials immediately warned that health-care facilities around the state — including Atlanta's Grady Memorial Hospital — could be forced to close if the governor's proposals are enacted.



Perdue is pushing a 10.25 percent cut in the amount the state gives to hospitals and health-care providers for serving Medicaid patients. He also proposed eliminating the state sales tax exemption for nonprofit hospitals, meaning they would have to pay sales taxes for purchases.



Earl Rogers, a lobbyist for the Georgia Hospital Association, said the cuts would harm patient care by leading to the layoffs of doctors and nurses.



"You go to a hospital where a nurse is in charge of taking care of eight patients and suddenly because of job layoffs she's in charge of 12 or more patients, then you're talking about potential life-and-death circumstances," Rogers said.



Others said the governor's plan would be devastating to the state's cash-strapped rural hospitals.



Hospital officials have been pushing for state officials to hike the state's cigarette tax by $1 a pack, which they say would raise about $342 million. But Republican leaders, some of whom have pledged to balance the budget without raising taxes, have been cool to the proposal, calling the revenue unreliable.



Perdue had initially proposed a 1.6 percent tax on hospital revenues. But hospitals and state legislative leaders panned the proposal, even though some hospitals who serve a large number of poor Medicaid patients would have benefited from a part of the plan that would have boosted Medicaid provider fees.



"Frankly, I don't think the hospital community has been fair to the citizens of Georgia," Perdue said.



Lt. Gov. Casey Cagle said Thursday that there is consensus on about 90 percent of what the governor released.



"The good news is we're working together," Cagle said.



The steep proposed cuts in health care came on the same day that state health commissioner Rhonda Medows said she was stepping down. Perdue said Medows' departure had nothing to do with the new budget proposal and that Medows, who has managed the state's massive health programs since 2005, was leaving to pursue other career opportunities.





Copyright 2010 The Associated Press.