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“No one has a good answer for that question,” says Ed Spivak, executive director of the non-profit Mississippi Economic Policy Center (MEPC).
If history is any guide, recessions usually arrive later in Mississippi, but last longer. There’s some indication that’s what is happening this time, if you go by what public officials have been saying. So far, we know the trend in state tax collections has shown a decline as we have moved further into the fiscal year.
The state’s unemployment rate has hovered around 10 percent for several months and is expected to top 10 percent soon, according to a forecast of the economic research center of the State College Board. Don’t forget: our jobless rate went even higher in the early 1980s before the Mississippi economy hit its best decade of prosperity in history during the 1990s.
Since 2000, Mississippi’s economy has been in decline as we saw the flight of manufacturing jobs from the state overseas and a greater dependence on lower-paying service jobs, plus an overall decline in take-home pay. All of the above paints a gloomy picture of Mississippi making any rapid recovery from this recession.
Politically, you wonder if in 2011 a governor can be elected by hanging the bad economy around the neck of Barbour as Haley did to Ronnie Musgrove in 2003. Right now, however, surviving the present economic downturn is our first worry.
Barbour has already come forward with his FY 2011 executive budget recommendations that rely entirely on deep cuts in spending for all but a handful of state agencies and proposed consolidation or elimination of several agencies which Barbour says will save money. His ideas for school district and university consolidations already appear destined for the trash can.
Of Barbour’s $370 million agency budget cuts, hardest hit would be Mississippi’s Adequate Education program, the heartbeat of public education. It would lose $235 million – a whopping 64 percent of overall reductions.
Why must vital state services – education foremost – have to bear the entire burden for balancing the state budget in this recession?, Sivak’s Economic Policy Center asks. Why not take a balanced approach that includes raising revenues along with spending cuts to maintain critical state services?
At MEPC’s November 23 economic forum, state economist Phil Pepper said Mississippi will see “very little increase in employment the next several years,” and that education will be the key to making the most of opportunities the state has to break out of the jobless trap.
In light the governor’s cuts-only strategy, MEPC issued a position paper declaring that this approach to financing state services “hurts working families, hurts the economy and limits our ability to invest in the state’s people.”
The non-profit economic study group said to generate new state revenue and provide a balanced approach to weather the current budget crisis “and be ready to take advantage of a recovering economy,” the state should consider updating both the sales and income taxes.
A new top bracket should be added to the income tax code (the top bracket now is 5 percent) while at the same time increasing exemptions and deductions. The group said the state could generate additional revenue “while taking into consideration the ability of working families to pay the tax.”
The state sales tax is now essentially applied to purchase of goods. However, the levy is also intended to apply to services, but its enforcement has become a crazy quilt of taxing certain services, while not taxing related services. MEPC said the sales tax could be expanded to include dozens more services to not only generate revenue but also spread out the tax burden.
At least some people are looking at ways other than budget cuts to maintain critical state services during the economic crunch.
Bill Minor, a nationally honored journalist, has covered Mississippi politics since 1947. Contact him at PO Box 1243, Jackson, MS 39215-1243, or e-mail at edinman@earthlink.net.