UPDATE: State lawmakers engage in last-minute budget blitz

JACKSON — Mississippi lawmakers started a frantic game of beat the clock Sunday as they convened a special session to try to pass a nearly $6 billion state budget before the new fiscal year begins Wednesday.

The House and Senate worked quickly on dozens of bills to fund most state agencies. Negotiators still had not agreed on how to fund Medicaid, the government health insurance program for the needy. It was not clear whether an agreement will come before Wednesday.

Democratic Attorney General Jim Hood said last week that if there’s still no Medicaid plan when the new fiscal year starts, a court order would be needed to keep operating the massive program that covers about one in every four residents. Republican Gov. Haley Barbour, however, believes he can run the program by executive order.

Barbour said he believes budget bills for most agencies will be signed into law on time.

“People’s attitudes are very positive and that they realize this budget’s a compromise, that nobody got everything they wanted, House, Senate or governor; that we’ve got a big revenue shortfall, a lot of federal money that comes with rules, and that all of that affects how the money will be spent,” Barbour told reporters Sunday in a Capitol hallway.

“This is a genuinely balanced budget,” Barbour said. “It’s not balanced with phony money.”

Among other things, lawmakers were debating whether to pass the second cigarette tax increase of the year. In May, the excise tax on all cigarettes jumped 50 cents — from 18 cents a pack to 68.

Barbour is asking lawmakers to put an additional 25 cents per pack on cheaper cigarettes made by companies that did not participate in Mississippi’s 1997 settlement of a massive lawsuit against tobacco companies.

Some lawmakers balked at the newly proposed increase.

Sen. Lee Yancy, R-Brandon, said it’s wrong to punish tobacco companies that were not sued or that were not even in existence when the lawsuit was settled. He also said the additional tax would hurt poor people.

“When is the government going to stop trying to meddle in people’s lives by continuing to try to raise taxes?” Yancy said.

Mississippi lawmakers usually finish the budget by early April, three months before the start of the fiscal year. They waited longer this year because they wanted to see how federal stimulus money will affect state government.

Legislators had said for months that the state would have a $5 billion general fund — the part of the budget that covers big-ticket items such as schools and prisons. In the past several days, they’ve started saying the figure is closer to $6 billion with the addition of federal stimulus funds and other chunks of money, including $40 million from Hood’s settlement of a state lawsuit against Microsoft and millions of dollars from the anticipated sale of contraband cigarettes seized by law enforcement agents several weeks ago.

The on-again, off-again regular session ended in early June. Barbour said for weeks that he would not set a special session until negotiators agreed on all parts of the budget, including Medicaid. He changed plans Saturday, announcing then that lawmakers would start the special session less than 24 hours later.

The governor wants lawmakers to put a $90 million annual tax on hospitals to help fund Medicaid. The Mississippi Hospital Association has lobbied hard against the plan, saying it would hurt facilities’ finances. Health advocates worry the hospitals would pass price increases along to patients.

House Clerk Don Richardson, the chamber’s top administrator, told members they need to finish voting on all budget bills by Tuesday morning. Legislative staff members need several hours to process the paperwork for bills so Barbour can sign them into law before midnight Tuesday.

“If we’re still here 48 hours from now, it’s probably too late,” Richardson said Sunday afternoon.

Longtime lawmakers say this is the first time in decades for Mississippi to be in danger of starting a fiscal year without a spending plan. News archives show that on July 1, 1968, Mississippi started the 1969 fiscal year with no budget and the regular session extended until that August.

Emily Wagster Pettus/The Associated Press

Click video to hear audio