BOBBY HARRISON: Mississippians cautiously watch revenue collections

By Bobby Harrison/NEMS Daily Journal

JACKSON – A person doesn’t have to be a rocket scientist or spend a night in a Holiday Inn Express to understand the state budget, but it would probably help.
While it’s not imperative that a person have an in-depth understanding of the budget, it is important to understand the basics because it affects so many aspects of the lives of ordinary Mississippians – from the number of teachers in classrooms, to the condition of roads to the number of troopers on state highways. The impact of the state budget on Mississippians is immense.
A new budget year has just begun.
And because of an unprecedented drop in state revenue, this budget, like the previous two, will be lean and mean. As a result of the budget, hundreds of teacher positions will be eliminated across the state. Health care services for the mentally ill will be reduced. College tuition will go up and college instructors will be teaching bigger classes as a way to save money.
The impact of this budget will be substantial.
And, it may get even worse.
The new fiscal or budget year began Thursday – July 1. Revenue to fund the budget is currently being collected through various tax sources, such as a sales tax on retail items, income tax, cigarette tax, casino tax and others.
Obviously, the size of the budget is tied directly to the taxes collected.
For the past three years, Mississippi has had a historic drop in state tax collections. That obviously has resulted in state budget cuts. Unfortunately, those cuts are being made at a time that because of the economy more people need government services.
That is the cruel irony of the state budgeting process. When the economy turns down, more people need government help, but the state collects less revenue, meaning less money to provide assistance.
June marked the 21st time in the past 22 months tax collections were below the estimate. For most of those months, the state also has collected less in revenue than it did the previous year.
The state also has now collected less in revenue than the previous year for three consecutive years.
That has not occurred in recent memory. In the early 2000s, the state once collected less in revenue one year than the previous year.
The estimate is key here. The Legislature and the governor build the budget based on the estimate. The fact that revenue has not reached the estimate is the reason Gov. Haley Barbour has made budget cuts the past two years – $466 million or 9.2 percent for most agencies for the recently completed budget year.
Now that a new budget year has begun it will be crucial to watch the monthly state revenue collection reports. If revenue collections are significantly below the estimate, look for Barbour to make more cuts to what some would say already is an anemic state budget.
The latest revenue estimate that the budget is built on reflects the historic drop in state revenue collections.
For the current year, leaders developed a budget based on .4 percent rate of growth. That sounds like an extremely small rate of growth. Historically, average growth is probably between 3 percent and 5 percent in Mississippi. But remember for the past three years revenue growth has not happened. The state has collected less in revenue each of those three years than it did the previous year.
If that happens for a fourth consecutive year, it will again be historic, an event that only a few years ago would have been unimaginable and mean the massive global recession has hit Mississippi even harder than anyone could have guessed.
And of course, now, because of the Gulf of Mexico oil leak, the state is having to deal with a drop in tourism, which could be another negative impact on state revenue collections.
It doesn’t take a rocket scientist to figure out these are tough times.
Bobby Harrison is Capitol Bureau chief in Jackson for the Daily Journal. Contact him at (601) 353-3119 or bobby.harrison@djournal.com.