Legislative budget leaves reserves

By Bobby Harrison/NEMS Daily Journal

JACKSON – The budget proposal adopted in early December by legislative leaders leaves more than $300 million in reserve funds that could be the center of debate during the upcoming 2013 legislative session.
How much, if any, of those reserve funds are tapped could be key to whether education receives more funding or whether other items, such as a requested increase in funding for the Department of Corrections or for Medicaid, are dealt with in 2013.
The new session begins Tuesday.
The budget recommendation approved by the 14-member Legislative Budget Committee leaves several sources of reserves, including $126.7 million in the Working Cash Stabilization Fund, commonly known as the rainy day fund, and $14.1 million in the Health Care Trust Fund, which was created after the state’s successful lawsuit against the tobacco companies in the 1990s.
“The Committee has left cash reserves for future needs,” the budget narrative stated
The budget proposal released by Gov. Phil Bryant in November leaves less in reserves. The main source of reserves in the Republican governor’s budget is nearly $100 million from spending only 98 percent of the projected revenue for the upcoming fiscal year, which starts July 1.
State law mandates that legislators only expend 98 percent of the projected revenue and set aside 2 percent in case actual revenue collections do not meet projections, but in many recent years during the economic downturns the law has been waived.
During the 2012 session legislators followed the law and spent only 98 percent of the anticipated revenue.
For the 2013 session both Bryant and legislative leaders again are advocating adhering to the law.
Bryant also expends a portion of $52 million in excess money in a fund at the Department of Revenue designed to help reduce the costs of car tags.
The Legislature puts $52 million in the fund in the 2009 session to shore up the fund. The fund, which depends on tax revenue from the sale of vehicles, has now been restored as car sales have ticked up in recent years after the downturn.
While the budget proposal of the legislative leadership does not touch the excess money in the fund, it does state “now that the fund is secure again, the Legislature may consider a repayment to the general fund.”
It is not uncommon for the governor’s budget proposal to depend on more sources of revenue to fund his proposal than does the Legislative Budget Committee.
Traditionally, legislative leaders have used only on tax revenue to fund its proposal and has not tapped other sources of revenue, such as the rainy day fund.
Instead, the legislative leadership has left the decisions to use those sources of revenue for the full Legislature to decide once the session begins.
Overall, the Budget Committee’s proposal is $5.52 billion, which is $32.2 million less than what the 2012 Legislature appropriated. By the same token, Bryant’s proposal is $5.72 billion – not including other items, such as deficits of $29 million for Corrections and $15.5 million for Medicaid, which are not funded in the Budget Committee’s proposal.
Plus, Bryant funds other items not addressed by the legislative leadership, such as $3 million for early childhood education and $42 million for the Department of Human Services as part of a settlement of a lawsuit dealing with the state’s foster care system.
bobby.harrison@journalinc.com