When I took office in January 2004, I was greeted with a $720 million budget hole. Years of spending more money than we took in had created a financial nightmare for the state. We had to tighten our belts and find ways to save money. We eliminated that hole in two years, and we did it without raising anybody’s taxes.
I have great concern my successor will face the same situation if the Legislature approves current budget proposals without addressing our economic reality.
Families are concerned about job security and planning for the future. Business owners are not hiring workers and are limiting investment. The approach of $4 gas this summer won’t help.
Under current budget proposals, legislators spend too much one-time money, which would leave us with a budget hole of almost $700 million in
Fiscal Year 2013. In contrast, my budget proposal outlined difficult, yet necessary, decisions to guide Mississippi out of the recession and back on the path of strong economic growth. My budget adequately funded agencies and called for structural changes to the way government operates with long-term financial success in mind.
In recent weeks, it is clear some legislative leaders would violate these budget principles by heading down a path to deplete almost all of our reserves. Their recommendations overspend taxpayer dollars in Fiscal Year 2012, which begins in July, resulting in a budget hole in FY 2013 and beyond that is so large, revenue would need to increase more than 10 percent in one year to grow out of it. Otherwise, with the small reserves left by FY 2012 overspending, tax increases would loom in FY 2013.
For example, the House budget spends more than $560 million in FY 2012 that won’t be available in future fiscal years. Their plan would spend millions in reserve funds by raiding the Rainy Day Fund, draining the hurricane disaster fund and using the Capital Expense Fund for recurring expenses. The House shortchanges debt service by $15 million even though we all know debt service must and will be paid. This is a preplanned deficit that will only add to our woes.
House leaders say their budget maintains some reserve funds. Even if we accept their argument that the House plan maintains reserves of $135 million to be spent in future fiscal years, that still means a shortfall of more than $565 million will remain for FY 2013. At this level, state revenue would have to increase by 12.3 percent just to cover this structural shortfall. Twelve percent-plus growth on the heels of an economic recession and in the face of $4 gasoline is obviously unrealistic; it also represents more than eight times the current estimated growth rate for state revenue.
I appreciate Senate Appropriations Chairman Doug Davis and his team for trying to make the FY 2012 budget more reasonable.
Mississippi cannot afford for its leaders to spend today and tax tomorrow. We cannot make decisions that will leave the state’s cupboard empty for next year.
Haley Barbour, a Republican, was elected governor in 2003. He is in the final year of his second term. Contact him through spokeswoman Laura Hipp – LHipp@governor.state.ms.us.
Gov. Haley Barbour