The Mississippi budget is in trouble — both this year and next — according to recent reporting from The Associated Press.
The wire service noted that lower-than-expected revenues have already forced Gov. Phil Bryant to cut $60 million in spending from this year’s budget. But with individual income tax payments to the state in April and May running $15 million below the same period last year, there is concern that one more round of cuts will be needed before the 2015-16 fiscal year ends June 30.
As for the coming budget year, there could be as much as a $175 million gap between actual revenues and approved spending. Part of the problem lies with Medicaid. Lawmakers gave the health-care program $88 million less than the $1.04 billion that it sought. The existing funding level implies that Medicaid spending will decrease next year — something that rarely if ever happens.
Also, State Treasurer Lynn Fitch has said the Legislature allocated $31 million less than what’s needed next year to make bond payments. Obviously the state will repay the loans, but some other parts of government are going to have to give up that money.
Here’s one more way to look at the budget problem: This year the governor, in addition to cutting $60 million, took another $50 million from the rainy day fund to make up a revenue shortage that totaled $110 million. Barring an unexpected economic resurgence that increases tax revenue, Bryant will be tempted to take more rainy day money next year.
The thing is, it’s really not raining right now. It’s more of a drizzle. Anybody who considers the current budget problems serious is ignoring the prior few years, especially 2008 to 2010, when the national recession took a severe whack at state revenue. That’s when a rainy day fund should be used — in a true emergency, but not when budgets like today’s are simply a challenge.
Something’s got to give, however. There are at least two areas where the Republican majority should show more fiscal discipline: Multimillion-dollar gifts to large companies and unaffordable tax cuts.
In the last few years, the Legislature, prompted by the Mississippi Development Authority, has given away hundreds of millions of dollars to attract two large tire manufacturing plants — along with a third gift of $20 million to appease an existing tire manufacturer.
Then in the recently completed session, the Legislature approved tax cuts that are expected to reduce revenue by $415 million a year when fully phased in a decade from now.
Republicans can claim that voters sent them to Jackson to cut taxes and create jobs. At some point, though, reality has to take hold, including an acknowledgment that the theory behind a lot of these tax cuts and corporate subsidies — namely, that the state will get back more from increased economic activity than it gives away — has not panned out. Thus, the only way to balance the books now is to cut spending, even while many critical needs — from transportation infrastructure to health care to education — are already going unmet.
Yes, despite the alarms from some state agencies, the present budget strain looks like more of a pinch than a choke hold. It will get worse, though, if the Republican leadership continues down this path.
