DULUTH, Ga. -- Gov.-elect Nathan Deal said Wednesday the state will have to lay off workers to shrink its 104,000-person work force as it copes with an ongoing state budget deficit.
"We're going to have downsize," Deal told a luncheon sponsored by Gwinnett Chamber of Commerce. "And that's tough."
Asked by The Associated Press after the speech whether layoffs would be needed, Deal said yes.
"I think you will see a downsizing starting with the executive branch agencies," Deal said.
A Deal spokesman, however, said afterward that layoffs could be just one of several options to pare down the workforce and insisted no decisions have been made.
"We are not looking to lay off employees," Brian Robinson said. He said Deal's goal is to lower costs for taxpayers and create a business-friendly climate that would create jobs.
Georgia is staring down an estimated $1.8 billion shortfall in next year's budget as federal stimulus money runs out. Personnel costs are among the state's largest expenses.
So far, state government layoffs have been limited in Georgia. The state mainly has used attrition to eliminate vacant positions and forced employees to take unpaid furlough days to weather the budget crunch.
Deal said the state faces difficult budget choices and that some of the easier cuts already have been made.
"Most of the low-hanging fruit's been picked a long time ago," Deal said. "In fact, we're looking for some really, really tall ladders right now and you climb up on those ladders and it's pretty tough to find some ripe fruit when you get up there."
Deal pledged to protect the state's popular HOPE scholarship program that is in financial jeopardy but allowed changes would be needed that could prove politically challenging. The lottery-funded HOPE scholarship is set to exhaust its reserves in 2014.
The incoming governor also warned that the state is facing a Nov. 1, 2011, due date on a roughly $450 million loan from the federal government to keep the unemployment insurance fund afloat. And interest on the loan also will begin to come due at the end of 2011.
"If we do not make timely payments on our interest and if we do not deal with the principal when it comes due then the federal law begins to mandate increased payments by employers," Deal told the business leaders Wednesday.
Georgia's unemployment rate is 9.9 percent.