State completing three years of revenue growth

other_state_newsBy Bobby Harrison

Daily Journal Jackson Bureau

JACKSON – The just-completed 2014 fiscal year marks the third consecutive year the state has experienced revenue growth of more than 5 percent.

Only four other times in Mississippi history since 1980 has the state experienced three consecutive years of revenue growth of more than 5 percent:

• In the early 1980s when an increase in the income tax contributed to that growth.

• Twice in the 1990s during the unexpected boom from the new casino gambling industry.

• In the mid-2000s from growth caused by the rebuilding effort after Hurricane Katrina slammed south Mississippi.

Most states across the nation are experiencing similar growth in revenue. According to a report published earlier this year by the National Association of State Budget Officers, state revenue collections cumulatively grew by 7.1 percent in FY2013, 3.8 percent in FY12 and 6.6 percent in FY11.

For the just-completed fiscal year, cumulative state revenue was estimated to grow by 3.2 percent; however, that was estimated in the spring before the fiscal year ended June 30.

In Mississippi, for the fiscal year ending on June 30, revenue grew by 5.57 percent, or $284.9 million, to $5.37 billion.

State revenue includes the sales tax on retail items, income taxes, corporate income taxes, casino taxes, the tax on insurance premiums and a few other smaller categories.

The growth in the two previous years was 5.1 percent in FY13 and 5.9 percent in FY12.

The growth is coming after two consecutive years in which, for the first time in modern history, the state collected less revenue than it did the previous year. Most states, in the midst of the Great Recession, suffered similar setbacks in revenue.

The recent growth spurt has allowed Gov. Phil Bryant and the Legislature to put the state budget, which was held together with federal funds and one-time sources of money during the Great Recession, back on more sound footing.

Rainy day fund filled

The Legislature has filled the rainy day fund to its statutory cap of $409.5 million, provided teachers a $2,500 pay raise over a two-year period, provided some low-income state employees a raise and eliminated much of the use of one-time money.

“State government is finally doing what taxpayers do every day in their homes and businesses: spending what it takes in, prioritizing needs and saving money for a rainy day,” Lt. Gov. Reeves said recently.

First-term House Appropriations Chairman Herb Frierson, R-Poplarville, chuckled when asked recently if he was living right, considering he was getting to develop budgets based on three consecutive years of strong revenue growth instead of, like during the last term, budget chaos caused by the Great Recession.

“Luck is when preparation meets opportunity,” he said.

Frierson admitted that strong revenue growth has made it easier to take steps to put the budget on more solid footing, but also quickly added the legislative leadership and the governor played key roles in taking advantage of that revenue growth.

Some would argue that in doing so the Legislature and governor have neglected education funding.

For instance, public education’s $2.4 billion budget for the current year (an increase of about $85 million over the previous year) provides $114 million less in direct funds to the local school districts through the Adequate Education Program than was provided in 2008, based on an analysis by the pro-education Parents Campaign.

Yet, during the past three years, state revenue has grown by about $800 million.

But Frierson said the budget work done in the past three years is putting the Legislature in position to take “a big step” in the direction of fully funding public education in the 2015 session during a multi-year period if revenue continues to be strong.

“That is what we have been working toward,” he said

For the current fiscal year, at the time, revenue is projected to grow by only 1.6 percent over the previous year. But if collections continue to be strong, the projection for growth could be increased this fall by legislative leaders.

For the month of June, growth was $13.4 million, or 2 percent, above the collections for the previous June.

Only one time since 1980, in the early ’80s, has the state had four consecutive years of growth of more than 5 percent.

bobby.harrison@journalinc.com

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Fiscal year | Total collected | % Increase

2006 | $4.33 billion | 12.8

2007 | $4.79 billion | 10.5

2008 | $4.94 billion | 3.1

2009 | $4.73 billion | -4.2

2010 | $4.5 billion | -4.9

2011 | $4.6 billion | 2.3

2012 | $4.9 billion | 5.9

2013 | $5.12 billion | 5.1

2014 | $5.37 billion | 5.6

*2015 | $5.46 billion | 16

*Estimated