OPINION: Recession economy presents an assortment of bad choices

JACKSON – Gov. Haley Barbour’s request last week that he be given more authority to cut state agencies as tax collections continue to miss projections was greeted with skepticism by House Democrats.
When revenue does not meet projections, the governor is required to make cuts. Under current law, he cannot cut any agency more than 5 percent until he cuts all agencies by 5 percent. Plus, the governor can take up to $50 million from the state’s rainy day fund to offset any cuts.
That essentially has been the law since at least the early ’90s.
The governor already has made cuts of a little less than $172 million this year. A little less than $160 million of that total came from education – kindergarten through university level.
As state tax collections continue to slump and fall further behind the projection, it is obvious that more cuts will have to be made to keep the state budget in balance. The governor told legislative leaders last week that because of limitations in state law, it is difficult for him to cut enough to keep the budget in balance during these historically bad economic times.
Probably the most important responsibilities our founding fathers gave the legislative branch of government are the authority to appropriate and the ability to raise revenue. The governor is essentially asking legislators to give up a significant part of that authority.
He probably shouldn’t hold his breath for that to happen.
By the same token, the governor faces some difficult and complex challenges. For instance, it is estimated that the governor might be forced to cut another $175 million because of slumping tax collections.
As an aside, I don’t think the tax collection shortfall will get deep enough to require additional cuts of that magnitude, but people a lot smarter than I am think it is likely that the state revenue slump will be that bad.
Even though national indicators say the economy is improving, some of those people say it will take time for tax collections in Mississippi to catch up with that improvement.
So for the sake of argument, I will assume those people who are a lot smarter than I am are right. After all, they are smarter.
Education and Medicaid make up more than 80 percent of the roughly $5 billion general fund budget. The governor already has cut 5 percent out of education. He cannot cut education any more until he cuts other agencies 5 percent.
But Barbour is reluctant to cut Medicaid. He said he fears that cutting the program will put in jeopardy the enhanced federal Medicaid match the state is receiving under the federal stimulus package.
If Barbour and the Legislature were to lose that enhanced federal match, the budget situation that is double, double bad now, would be at least triple, triple bad.
At any rate, it would be bad.
By the same token, Barbour doesn’t know if he can garner the required savings by cutting agencies other than Medicaid by 5 percent if the slump continues to be as bad as those people a lot smarter than I am say it will be. That is why Barbour says he needs additional flexibility in his ability to cut.
Does that mean he wants to cut education again – more than 5 percent – without cutting some agencies 5 percent?
At any rate, House leaders are not inclined to give him that flexibility. Last week, after meeting with Barbour, both Cecil Brown, D-Jackson, and Steve Holland, D-Plantersville, two key House appropriators, questioned the wisdom of giving Barbour or any governor that authority.
“Why would we want to turn the state budget over to one person regardless of who that person is?” Brown asked.
No doubt, the current economic woes have created many quandaries and left Barbour with limited choices.
He could try to get that expanded authority to cut when the Legislature returns in regular session in January. He could make the 5 percent cuts in the other agencies now and wait for the Legislature to come into regular session to act on what additional cuts need to be made.
Barbour could call the Legislature back in special session to take up budget issues. He has indicated he might add budget issues to the agenda if he calls a special session later this month for an economic development project. He had said he was calling a special session last week, but it has been delayed indefinitely.
Of course, the governor could take $50 million out of the rainy day fund to ease some of the budget woes. But that is not likely. He said that money might been needed for budget problems extending out the next two to three years.
The current economic situation has left Mississippi government officials, like those in other states, with limited choices and they are just about all bad.
Contact Journal Capitol Bureau chief Bobby Harrison by e-mail at
bobbyharrison@djournal.com or call him at (601) 353-3119.

Bobby Harrison

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