By Bobby Harrison/NEMS Daily Journal Jackson Bureau
JACKSON – Less than two weeks after Hurricane Katrina pummeled south Mississippi in late August 2005, about 100 legislators met in the House chamber of the state Capitol to receive an update on the recovery effort.
The legislators – many from the Coast who said they were attending the meeting in borrowed clothes because they had lost everything – listened with skepticism as Darrin Webb, a state economist, predicted the devastating storm would have a short-term negative impact on the state’s economy, but in the long run would be a boon.
“We see the economy suffering for a few months, then gaining in growth as construction gets under way,” Webb said.
History proved Webb correct.
As it turned out, the influx of literally billions of dollars in federal disaster assistance and insurance payments caused state revenue collections to soar.
Because of those revenue collections, the state was able to fully fund the Mississippi Adequate Education Program, which is the state’s share of support for local schools, for only the second time in history and to provide pay raises to state employees and teachers. University and community colleges received significant bumps in funding.
Hurricane Isaac, which slammed the Mississippi Gulf Coast on Aug. 29 seven years to the day after Katrina, was a far less destructive storm than Katrina. But it did linger longer, causing significant flooding and some wind damage.
Could it, too, prove a boost to the state revenue collections for the 2013 session as legislators and Gov. Phil Bryant deal with a budget shortfall caused by the recession that hit in 2008?
Webb said not to count on it.
“My thinking is that while in theory there may be some slight uptick in revenues as a result of Isaac, it will be inconsequential,” Webb said in response to Daily Journal inquiries.
Lt. Gov. Tate Reeves served as state treasurer when Katrina hit and saw first-hand the impact it had on revenue collections. He agrees with Webb’s assessment.
Reeves said, “The final damage assessments caused by Hurricane Isaac will not be known for some time, but we should not anticipate a shopping spree like we saw after Hurricane Katrina … Families throughout the state rebuilt houses and replaced belongings like appliances and cars, and those purchases translated into revenue for state and local governments through tax collections. Widespread purchases on that scale simply are not likely.”
Bryant also agreed, saying he anticipates no significant impact.
Katrina hit early in fiscal year 2006. For that fiscal year, revenue collections grew 12.8 percent – the first double-digit increase since 1994 in the midst of the burgeoning casino gambling industry in the state. In 2007, the state experienced another double-digit growth in revenue.
But by 2008 as the national economic slowdown hit, state revenue collections were only growing 3.1 percent, followed by two unprecedented years of negative growth.
After those two years where collections were less than the previous year, the state is again experiencing modest growth in revenue. But Webb said not to expect too much from Isaac.
“You will recall that last year we saw arguably greater flooding (along the Mississippi River) and yet we did not really notice a revenue bounce. If there is a bump this year, my guess is we will not be able to identify it in the data,” Webb said.
Webb also said, besides Isaac being a much smaller storm, “there is less of a taste for federal spending” to help with the recovery.
The federal government paid for nearly all of the clean-up and much of the recovery after Katrina.
Reeves predicted the federal government will expect local governments and the state to provide matching funds for the cleanup and recovery after Isaac.