Mississippi state budget (2008-2009)

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State Information


For fiscal year 2009, Mississippi faced a $175 million deficit that the Center on Budget and Policy Priorities projected would decline to $87 million for fiscal year 2010.[1]

Gov. Haley Barbour had already cut approximately $87.8 million from elementary and secondary schools — approximately 3 percent of the budget for the fiscal year that ended June 30.[2] In the governor's fiscal year 2010 budget recommendations, he noted that the state's revenue was declining. "Some of our counter-cyclical sectors, like energy and defense contracting, appear less healthy than a few months ago," said Barbour. The gaming industry, too, had seen a decline in revenue, as had commodities that state officials anticipated would affect farmers, incomes and state oil and gas severance tax collections.[3] In light of declining revenues the governor said that agencies, including higher education, would see a 5 percent cut to funding. "The news is not as bad as it could be," he said. "Just as the legislature has been prudent in filling the Rainy Day Fund, our school districts have done a great job of setting aside their own Rainy Day Funds."[4]

Impact of budget woes

See also: State budget crisis, 2009-2010
  • Mississippi had lost 26,200 jobs, or approximately 2 percent, in the last six months of 2008. By comparison, total non-farm employment in the U.S. fell by 1.87 percent over the same period. Losses were heaviest in manufacturing, 10,400 jobs lost, followed by the leisure and hospitality sector, 6,500 jobs lost, and professional and business services, 4,600 jobs lost. Together these three sectors accounted for 82 percent of the job losses through December.[5]
  • Construction employment in the national economy caused approximately 24 percent of job losses in 2008, compared to only slightly more than 2 percent of the job losses in Mississippi.[5]
  • Mississippi Valley State University faced a potential 10 percent, $1.5 million state budget cut for fiscal year 2010. According to university officials, 69 percent of spending went towards salaries, which meant that layoffs might have occurred in the near future for university employees. In order to lessen unnecessary expenses, officials had held off on hiring new employees for current open positions.[6]
  • Most state agencies had already made 5 percent budget cuts. The funding formula for elementary and secondary schools in Mississippi was cut by $76 million, 3.49 percent. Education officials said that they were still finding ways to replace the funds.[7]

Budget background

See also: Mississippi state budget

The budget process in the state of Mississippi is a year-long evolution. Officially beginning in May, state agencies prepare requests before submitting them to the governor for consideration in October. But before submitting a recommended budget, the governor first consults a group composed of the state economist, the state fiscal officer, the state treasurer, the chairman of the state tax commission, and the director of the legislative budget office. The group provides an estimated revenue forecast for the upcoming fiscal year based on current economic indicators and the economy's growth. On December 15 the legislative budget committee submits the balanced budget recommendation to the legislature. After a series of meetings and votes are made on individual bills, both the House and the Senate must approve the reports on the appropriation bills by the close of the legislative session, April 1. The governor signs the bill into law.[8]

Mississippi's fiscal year begins July 1 and ends June 30.[3]

Budget figures

The following table provides a history of Mississippi's expenditures and gross domestic product (GDP).

Fiscal year Expenditures (billions) GDP (billions)
2000 $15.4[9] $64.3[9]
2001 $16.3[9] $66.0[9]
2002 $17.3[9] $68.1[9]
2003 $18.4[9] $72.3[9]
2004 $19.5[9] $76.5[9]
2005 $20.0[9] $79.5[9]
2006 $22.1[9] $84.6[9]
2007 $24.4[9] $88.5[9]
2008 $26.9[9] $92.7[9]
2009 $29.8*[9] $97.0*[9]
  • NOTE: The figures for FY 2009 had not been finalized at the time this data was compiled.

Ideas about why the crisis occurred

  • Collections for the general fund in January 2009 were approximately $25 million, or 6.5 percent, lower than expected. According to state officials, the total state budget was $90.8 million below estimates for the fiscal year. In December revenues were $65 million below estimates.[7]
  • General fund collections for January were $23.8 million below what was collected for the same month in 2008, according to a legislative budget report issued in February.[7]
  • Most of the state's revenue stems from sales taxes and in February the collected revenue was closer to estimates than prior months - only 1.18 percent below estimates.[10]
  • Mississippi gaming revenue dropped to $2.72 billion in 2008, a 5.9 percent drop from 2007. According to the American Gaming Association, casinos reported earnings down 3.6 percent in the first 11 months of 2008 compared to 2007.[11]
  • In January 2009 a bill passed the state House that would require the governor to sell his nearly $4 million dollar plane, which costs $1,900 per hour to use. The state owed $500,000 on the jet. Should the jet be sold, the governor and state officials had three other aircraft for use. The bill gained support from 76 lawmakers; 42 opposed it. State Rep. John Moore tried unsuccessfully to change the bill to get rid of all state planes.[12]

Proposed actions

Governor Haley Barbour

In the governor's state of the state address, he announced that due to the $100 million dollar deficit the state would be making a 5 percent cut across the board in all state agencies.[3] State lawmakers, in an attempt to raise the state's revenue, had suggested increasing the cigarette tax. Barbour, once an opponent of the legislation, said that he supported a modest increase. Barbour was recommending an increase of $0.24 a pack for premium cigarettes and $0.43 a pack on cigarettes produced by companies that didn't participate in the state's 1997 settlement of a lawsuit against the tobacco industry. However, Barbour warned lawmakers that cigarette sales might decline because of the higher federal tax. He also warned that smokers might cross state lines, thus not increasing state revenue.[13]

Mississippi was expected to receive approximately $2.8 billion from the federal economic stimulus package however, Barbour said that he was planning on rejecting some of the money, primarily the unemployment funds. The state was expected to receive $58.3 million for unemployment benefits; however, the state would first have to change its laws to allow more unemployment compensation and expand the qualification of applicants.[14]

Republicans

Despite the governor's 5 percent cuts throughout the state's agencies, including higher education, some Republicans were pushing a $410 billion omnibus spending bill that would pay for the government's operations through September 2009. Although the bill was rife with earmarks and not all Republicans were content with the large amount of small local projects, others believed that the bill was just what Mississippi needed.[15][16] "The ... funding that would be directed to Mississippi would do much to help our state recover from the economic downturn we face," said Senator Thad Cochran. The top-ranking Republican on the Senate Appropriations Committee, Cochran inserted tens of millions of dollars in university grants, Army Corps of Engineers projects and dozens of other earmarks.[16] However, like the governor, Republicans said that they were wary of the federal stimulus package that some lawmakers said would "rescue" Mississippi. Senator Roger Wicker said, "I'm afraid that a lot of the spending programs the president is proposing - and it's been a spending spree - would require higher taxes on small businesses."[17] Republicans throughout the state questioned not only the stimulus' budget but also its ability to work. Cochran said, "I disagreed with the amount of spending proposed and the failure to provide incentives to stimulate the economy."[18]

Democrats

Democrats across the state said it was important that the state's infrastructure be rebuilt and maintained because this, said Rep. Brandon Jones, would bring and maintain jobs in Mississippi. Although the governor had expressed that cuts across all state agencies was necessary, Democrats disagreed. "We will not dig our way out of bad times by de-funding education; we will only dig ourselves a deeper hole. That is why when over 17 million dollars were cut from our state’s community and senior colleges, Democrats in the House led a bipartisan effort to restore these funds to our Institutions of Higher Learning," said Jones.[19] Additionally, Democrats said that Mississippi simply could not afford to reject the federal stimulus package. "It is appalling to me [that] Governor Haley Barbour would be ambivalent to receiving funds from the stimulus package being debated before Congress now," said Jamie Franks, Chairman of the Mississippi Democratic Party. "The deficit is rising each month because of drops in tax collections and Governor Barbour is neither joining Democratic nor Republican governors in their support of passage of the stimulus package."[20]

Economic stimulus package

Mississippi was expected to receive approximately $2.8 billion from the $787 billion economic stimulus package. The estimated total impact of the funds was totaled at $5.2 billion. According to White House officials, the stimulus bill was estimated to create or save 30,000 jobs.[21]

However, Gov. Haley Barbour said he would refuse about $56 million in unemployment compensation because it would require Mississippi to expand benefits to part-time workers.[22] Barbour added that accepting the money would mean increased taxes for businesses that would have to cover the cost of the extra unemployment benefits in the future. "We want more jobs. You don't get more jobs by putting an extra tax on creating jobs," Barbour said.[23]

According to preliminary reports, Mississippi was expected to receive:[24][25]

  • $56 million for unemployment benefits
  • $350 million for highways and bridges
  • $480 million in block grants for education
  • $790 million for Medicaid

Budget transparency

Mississippi has a statewide, official spending database online. The Mississippi House Bill 101 (2008), Mississippi Accountability and Transparency Act, mandated the creation of such a website.[26] The state has also launched the State of Mississippi Management and Reporting System.

Legislation

  • Mississippi House Bill 101 (2008), Mississippi Accountability and Transparency Act[27]

Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases
State database Searchability Grants Contracts Line item expenditures Dept./agency budgets Public employee salary
MS Management and Reporting System Y
600px-Yes check.png
N
600px-Red x.png
Y
600px-Yes check.png
Y
600px-Yes check.png
Y
600px-Yes check.png
N
600px-Red x.png

Limitations and suggestions

As of 2009, this site did not enable users to search for particular employees to find out specific salaries.

Support for creation of the database

The National Taxpayers Union supported the passage of Mississippi's Mississippi House Bill 101 (2008), Mississippi Accountability and Transparency Act, and issued a press release describing the bill's passage.[28]

Public employee salary information

See also: Mississippi state government salary

Economic stimulus transparency

  • The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the nation. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.[29]
  • Mississippi was expected to receive an estimated $1,606,249,181.[30]

See also

External links

References

  1. Center on Budget and Policy Priorities,"State budget troubles worsen," February 10,2009
  2. Associated Press,"State budgets being delayed by stimulus debate," February 10,2009
  3. 3.0 3.1 3.2 State of Mississippi,"FY 2010 Executive budget recommendation," November 17, 2008
  4. The Reflector,"Barbour budget cuts limit agencies," February 10,2009
  5. 5.0 5.1 Hattiesburg American,"Mississippi would continue to feel recession's effects," March 1,2009
  6. Associated Press,"MVSU faces possible 10% budget cut," March 2,2009
  7. 7.0 7.1 7.2 Clarion Ledger,"Miss. tax revenue off $90M," February 5,2009
  8. Mississippi Economic Policy Center,"How was the state’s budget created?," accessed March 2,2009
  9. 9.00 9.01 9.02 9.03 9.04 9.05 9.06 9.07 9.08 9.09 9.10 9.11 9.12 9.13 9.14 9.15 9.16 9.17 9.18 9.19 US Government Spending,"Mississippi State and Local spending," accessed February 27,2009
  10. Clarion Ledger,"Miss. sales tax revenue down in Feb.," March 2,2009
  11. Associated Press,"Mississippi records drop in revenue in 2008," January 21,2009
  12. Clarion Ledger,"State plane could be sold on eBay," January 30,2009
  13. Associated Press,"Miss. lawmakers still pushing cigarette tax hike," February 26,2009
  14. Jackson Free Press,"Federal Stimulus: ‘We Need to be Ready’," February 26,2009
  15. Hattiesburg American,"House approves $410B in spending," February 26,2009
  16. 16.0 16.1 Clarion Ledger,"Spending bill may give Miss. millions," March 2,2009
  17. Clarion Ledger,"Miss. leaders split on Obama speech," February 26,2009
  18. The Mississippi Press,"Both Mississippi senators vote against stimulus," February 11,2009
  19. Mississippi Democrats,"State Rep. Brandon Jones gives Democratic response to state of the state," January 13,2009
  20. Mississippi Democrats,"Mississippi can't afford to say no!," February 5,2009
  21. WLBT3,"Jobs could be biggest part of Mississippi's stimulus benefits," February 17,2009
  22. Associated Press,"Skirting governors to get stimulus may not be easy," February 27,2009
  23. NPR,"Governors to Obama:'Thanks, but no thanks'," February 25,2009
  24. MSNBC,"Barbour wants more stimulus money for construction," February 27,2009
  25. WLOX-TV,"State leaders promise stimulus money would be well spent," February 26,2009
  26. National Taxpayers Union, "Nation's Largest Taxpayer Group Applauds Mississippi for Passing Spending Transparency Legislation," April 17, 2008
  27. Department of Finance and Administration, "Mississippi Management and Reporting System," June 20, 2008
  28. National Taxpayers Union, "Nation's Largest Taxpayer Group Applauds Mississippi for Passing Spending Transparency Legislation," April 17, 2008
  29. National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
  30. Wall Street Journal,"Stimulus Spending by State," March 12,2009