ATLANTA - Gov. Sonny Perdue has signed legislation that would increase dozens of Georgia user fees and slap a new tax on hospitals to help balance the state's struggling budget.

The legislation Perdue signed Wednesday would also cut taxes for property owners and upper-income senior citizens.

"Signing this bill ensures a balanced budget and lays the groundwork for economic recovery," the Republican governor said in a statement.

The tax cuts would phase in over five years and were tacked on during this year's legislative session to give some GOP legislators cover to vote for a controversial proposal to tax hospitals on their revenue. The additional money from the 1.45 percent tax on hospital revenue is to be funneled to Medicaid.

Lawmakers were struggling to close a $785 million budget shortfall for the fiscal year that starts July 1. It follows 15 months of plunging revenues.

Perdue had pushed both tax cuts in past years without success. Together, they'll mean the loss of $387 million in revenue when they are fully phased in by 2016.

The approved property tax cut would eliminate the state portion of property taxes. Perdue's office said savings would amount to roughly $31.50 a household.

Senior citizens would see the state tax on their retirement income phased out over five years. Seniors already have the first $35,000 in passive, retirement income exempt from state income taxes. The change would apply to those who have even more in their investment and retirement accounts. Seniors still in the workforce earning wages would not see a tax break under the plan.

The bill takes effect immediately.