Barbour faces possibility of new cuts

Fiscal year 2008 revenue collections $4.94 billion
Fiscal Year 2009 revenue collections $4.73 billion
Fiscal year 2010 estimated revenue collections $4.75 billion

By Bobby Harrison
Daily Journal Jackson Bureau
JACKSON – Even though the new budget year is just more than a month old, speculation already has begun that Gov. Haley Barbour will be forced to make cuts to state agencies.
The Legislature and the governor finally agreed on a budget on June 30 only hours before the new fiscal year began. But because of alarmingly sluggish revenue collections, the governor might be forced to make changes to that budget agreement.
Dismal state tax collections during July are casting doubt on whether the state will bring in enough money to fund state agencies at a level called for in the budget.
For the month of July, tax collections were $26.2 million, or 11.3 percent, below projections. Tax collections for the month were $56 million, or 21 percent, below the amount collected during the same time period last year.
Under state law, the governor can start cutting the budget whenever he decides collections will not meet the official revenue estimate, which is the amount used to build the budget.
The governor is required to make cuts at the end of October if revenue collections are below 98 percent of the official estimate. The governor also can use $50 million from the rainy day fund in lieu of cuts.
Despite the tough July collections, a spokesman for the governor said it is too early to start making cuts.
“I think at the very least we will wait another month – realizing that report was one of 12,” said Dan Turner. “It may be premature to make cuts, but it certainly puts everyone on notice that as tight as we assumed the budget would be, it is even tighter.”
House Education Chairman Cecil Brown, D-Jackson, a key member of the Appropriations Committee who is often at odds with Barbour, said the governor cannot wait long to cut. The longer he waits, Brown said, the more impact the cuts will have because the agencies will have to absorb them over a shorter time frame.
“That was a bad month,” Brown said. “If we are down that much every month, that would be $700 million. That is huge.”
During the past session the Legislature changed the law to give the governor the authority to restore any cuts he makes if the revenue collections rebound.
In 2005, then-Gov Ronnie Musgrove started the fiscal year by not making cuts, but by asking agencies to hold back 5 percent of their spending. That helped when agencies had to make cuts by easing the impact.
In a prepared statement this week, Barbour did not ask agencies to hold back spending, but he did say, “State agencies must spend tax dollars responsibly and keep in mind that cuts may be needed in the current fiscal year.”
State revenue is collected on a number of items, but primarily on retail sales, income and casino earnings.
“The effects of the current recession will continue to impact the state budget in the months and years to come,” Barbour said. “Mississippi faces serious budget problems.”

Bobby Harrison/NEMS Daily Journal

Click video to hear audio