BOBBY HARRISON: Contrasting positions face off in 2010 legislative budget battle

JACKSON – With all of state government, including education, in a state of limbo because of the inability of the Legislature and Gov. Haley Barbour to agree on a budget, it could be useful to look at the proposals the various sides have offered.
But a caveat should be offered that as negotiations continue, the proposals are changing.
It also should be pointed out that despite the difficult budget situation, all sides agree that at least $260 million would be saved in the state rainy day fund to be used during the 2010 legislative session and perhaps beyond.
Both Senate Appropriations Chairman Alan Nunnelee, R-Tupelo, and Barbour want to:
– Impose a tax increase on hospitals.
– Place essentially the amount of money the hospital tax increase will generate in a savings account to be used during the 2010 legislative session.
– Take $95 million out of the state’s $370 million rainy day fund to spend this year.
As difficult as the state budget situation is now, it most likely will be even tougher in 2010 when federal stimulus funds run out and are not available to plug budget holes.
Both Nunnelee and Barbour say there is no connection between the hospital tax increase they covet and the amount of money they want to set aside for next year.
Barbour wants a $90 million tax increase on hospitals while setting aside $95 million. And yes, as strange as it sounds, he is proposing taking $95 million out of the rainy day fund to spend this year while putting $95 million in a savings account to spend during the upcoming 2010 legislative session.
Does anyone know how to play a shell game?
Nunnelee has proposed a $60 million tax on hospitals while proposing setting aside $60 million, though, he has said he would prefer a $90 million tax increase.
The fact that the amount of the tax and the amount of the set-aside are the same or close to it is a coincidence, both Barbour and Nunnelee say.
Both the House and the Senate chambers have essentially voted for no tax increase on hospitals.
Despite the vote of the two chambers, Nunnelee, who serves as Appropriations chair as an appointee of Lt. Gov. Phil Bryant, and Barbour say the hospital tax increase is needed to avoid deep cuts in the budget.
The other relevant proposal is that of House Appropriations Committee Chairman Johnny Stringer, D-Montrose. Stringer has proposed:
– Placing a $45 million tax increase on hospitals, that under certain conditions would go as high as $60 million, though he has backed off that figure.
– Taking $95 million out of the state’s $370 million rainy day fund to spend this year.
– Spending all the money available for this year.
In other words, Stringer is not proposing taking money out of the rainy day fund on one hand while at the same time establishing another savings account.
What is being missed in this debate is that money is available this year to avoid deep cuts while not raising the hospital tax. The key is whether money is set aside for the 2010 session.
If the budget situation is as glum as is predicted in the 2010 session, legislators still will have the hospital tax increase as an avenue of last resort to raise additional funds.
If the budget situation is dire and massive cuts and layoffs of state employees are likely during the 2010 session, there might be more of a political will by a majority of legislators to increase the hospital tax.
But for whatever reason, Nunnelee and Barbour seem intent on saying the only options this year are increasing the hospital tax or having deep budget cuts.
Stringer says there are other options.
And, that is where the process stands.
Contact Capitol Bureau Chief Bobby Harrison at or at (601) 353-3119.

NEMS Daily Journal

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