By Bobby Harrison/NEMS Daily Journal
JACKSON – The state budget situation still looks bleak at best, but recent tax collections indicate the possibility of a light at the end of the tunnel.
Revenue collections for the first two months of the fiscal year are $18.7 million, or 3.4 percent, above the estimate. Collections for the just completed month of August are $12.4 million, or 3.9 percent, above the estimate.
The estimate is important because it represents the amount of money the 2010 Legislature used in budgeting for the current fiscal year, which started July 1.
Any amount of money above the estimate would be available for the 2011 Legislature to appropriate for the next fiscal year, which is expected to be another difficult one for the Legislature and Gov. Haley Barbour.
“It is better to be on the positive side than the negative,” said House Appropriations Chair Johnny Stringer, D-Montrose. “Sales tax is also above the estimate. That is a good sign.”
The Legislature has had an unusual length of time in which it has had to deal with negative revenue collection numbers. For an unprecedented three consecutive years, the state collected less in revenue than it did the previous year.
Only in one other year in recent memory – 2002 – did the state collect less revenue than it did the previous year.
The drop in tax collections has resulted in the elimination of teaching positions and layoffs or furloughs for many state agencies.
Based on the revenue collections for the first two months of this fiscal year, Stringer said he is hopeful that the Legislature can begin work on a budget in 2011 with a surplus.
The state also will have about $62 million in tax collections from the past year that were not spent.
Under state law, Stringer said about $45 million of that amount will be available to appropriate in the 2011 session. The rest will be split between the state’s rainy day fund and capital maintenance fund.
But that does not mean the 2011 session will be easy when it comes to putting together a budget. The revenue growth thus far is a modest uptick from last year, which was the third year of collections that were less than the previous.
Plus, during the 2011 session, the Legislature will look at how to replace $383.2 million in federal stimulus funds, which will no longer be available to plug budget holes.
But it does appear that about $125 million in new federal stimulus funds will be available for the state.
“While tax collections for the first two months of the fiscal year have been close to our expectations, nothing changes the fact that we face a massive budgetary cliff in fiscal year 2012 when several hundreds of millions of federal stimulus dollars go away,” said Barbour.
Barbour has predicted the budget holes will be as much as $600 million.
But that figure would appear even more daunting if the state tax collections still were not making the estimate, which occurred for 21 of 22 months before July and August of the current year.
Contact Bobby Harrison at (601) 353-3119 or email@example.com.