With just a week left in the state’s fiscal year, Gov. Haley Barbour said Monday he won’t call lawmakers back for a special session to pass a state budget because he’s unhappy with a Medicaid agreement reached by House and Senate negotiators that would prevent him from making spending reductions in the program.

Barbour said state law allows him to make cuts within the program.

“I will fight the proposal with all my might,” Barbour said in a statement. “Obviously, there is no reason to call a special session when such enormous Medicaid issues remain unresolved.”

The legislators’ agreement includes a hospital tax that begins at $60 million, but could increase to $90 million when the state’s share of the federal stimulus runs out in 2010. The agreement also prohibits any cuts to providers below the rates currently in effect.

The hospital tax has kept lawmakers at odds for the past several months. Barbour wants a $90 million tax. He has said anything less than that would lead to cuts within the Medicaid program, which serves some 500,000 of the state’s elderly, disabled and poor.

House members had opposed the full $90 million. They wanted assurances that if any tax is imposed, hospitals won’t risk losing further funding through reduced reimbursements and coverage.

Republican Lt. Gov. Phil Bryant issued a statement supporting Barbour and said the governor should continue to have authority over Medicaid’s budget.

House Speaker Billy McCoy, D-Rienzi, sent Barbour a letter urging him to call legislators back to the Capitol.

“We need to calm the fears of the hard-working, tax-paying citizens of the state of Mississippi, along with our state agencies and their employees that we will have a budget and that it is being prepared,” McCoy wrote.

House Appropriations Chairman Johnny Stringer, D-Montrose, said “what the governor wants to do is to say that he wants a larger tax increase before we can have a budget.”

Lawmakers had been moving forward on a state spending plan Monday, working on the last funding details to draft legislation in preparation for being called back for the special session.

Time is running out for legislators to pass a budget deal before the new fiscal year begins July 1. The unresolved budget has left many agencies in limbo. The Mississippi Transportation Commission has begun sending out letters to terminate road contracts.

Officials say some school districts have lost teachers because the instructors couldn’t be offered new contracts. That’s also been the case for some counselors and principals, said Nancy Loome, executive director of The Parents Campaign, an education advocacy group.

“The more quickly we can get the budget passed, the more quickly we can stop that kind of bleeding in the school district,” she said Monday.

Rep. Cecil Brown, D-Jackson, a key budget writer, said lawmakers would need at least five days to complete the budget process. Brown said it’s unclear what will happen if the new fiscal year starts without a finished budget. However, Brown said the state treasurer cannot pay any of the state’s bills if there’s no appropriation.

“Attorney General Jim Hood is preparing to go to court to get an order to keep agencies operating,” Brown said.