Mon., July 18, 2011 3:16pm (EDT)

Debt Deal Could Hit State Budget
By Orlando Montoya
Updated: 3 years ago

ATHENS, Ga.  —  
President Barack Obama listens as Vice President Joe Biden makes a point during a meeting with the Democratic leadership in the Oval Office, June 23, 2011.  (Official White House photo by Pete Souza)
President Barack Obama listens as Vice President Joe Biden makes a point during a meeting with the Democratic leadership in the Oval Office, June 23, 2011. (Official White House photo by Pete Souza)
Political experts say, the rancorous debate over the federal debt limit is likely to end with more budget pain for states like Georgia.

Any deal to raise the limit is likely to be paired with spending cuts.

The state relies on federal grants for everything from health care to home energy assistance.

Federal spending fuels highway and military construction.

The state wants millions of dollars to deepen the Savannah harbor.

University of Georgia public policy professor David Bradford says, restructuring health care spending for the poor could be the biggest target.

"Medicaid is one of the largest items on Georgia's budget," Bradford says. "Currently, it's something in the neighborhood of $6 billion to $7 billion a year that we spend on Medicaid in the state. The federal government pays about 75% of that."

A spokesman for Governor Nathan Deal says, if a debt deal slashes grants to states, it also has to cut mandates.

Right now, federal Medicaid dollars come with sets of rules that determine eligibility.

But, the state has some flexibility that might be stretched to the limit in deficit reduction.

"There are a number of children and adults who are covered by Medicaid and PeachCare here that are not in categories of eligibility that require that they be covered," Bradford says. "So, one reaction the state may be forced to would be to cut eligibility for those people."

Of course, any deal -- and its effects on Georgia -- are still far from certain.