State use of one-time money declines

herbfriersonBy Bobby Harrison
Daily Journal Jackson Bureau

JACKSON – The Mississippi Legislature and Gov. Phil Bryant used $420.1 million in non-recurring funds for this year’s $5.8 billion state-supported budget – a small but significant drop in the eyes of state budget leaders in the use of one-time money.

The current fiscal year, 2014, represents the smallest amount of one-time money used for the general fund budget since pre-recession fiscal year 2008, when the state was still flush in revenue from the rebuilding after Hurricane Katrina.

Reducing the one-time money used to fund recurring expenses has been a goal of House and Senate leaders and of fellow Republican Bryant.

The Legislative Budget Committee, which consists of Lt. Gov. Tate Reeves, Speaker Philip Gunn and 12 other House and Senate leaders, will begin meeting in September to develop a budget proposal for the 2014 Legislature. One goal will be to continue to reduce reliance on one-time money.

“If we could get it down to $100 million that would be manageable,” said House Appropriations Chair Herb Frierson, R-Poplarville. “I don’t think we will ever eliminate it because about $100 million is recurring.”

Frierson’s admission that the phrase “one-time money” might in certain instances be a misnomer is something the fiscally conservative Republican leadership has not always acknowledged.

But going back at least to the 1990s – when the state was experiencing historic revenue growth thanks to newly minted casinos – the Legislature and governor were still using one-time money each year.

The bulk of the state’s $5.8 billion budget is derived from a litany of taxes, on retail items, personal income, corporate income, casinos, tobacco and liquor, insurance premiums and other items. Those taxes and others support the state general fund, or the agencies that run on taxes that apply to most people. Other agencies run on special taxes or fees, such as a fee on barbers to support their regulatory board. Plus, the state receives more than $8 billion each year in federal funds.

The term one-time money can mean many different things. In recent years, the state has scooped up money from various special-fund agencies that operate on a specific fee or tax, such as the Department of Transportation funded through a fuel tax, to prop up agencies funded through more general levies. One-time money also can refer to the $100 million-plus the state gets each year from the tobacco lawsuit settlement, which is received annually but considered one-time money because by law it is not supposed to fund recurring expenses.

The Legislature also by law is supposed not to spend 2 percent of anticipated revenue. When the Legislature changes the law to spend the 2 percent set aside, it is identified as one-time money.

The state has less need for one-time money when tax revenues are strong. After an unprecedented drop in revenue, the state has experienced modest growth for three years. For the past two years, growth has been more than 5 percent above the previous year.

For the current fiscal year, which started July 1, legislative leaders have adopted a more cautious estimate of revenue growth of 2.8 percent over the previous year.

While additional revenue growth would help reduce the use of one-time money, Frierson predicted agency heads would make requests totaling nearly $1 billion more than they received during the 2013 session.

“I would like to get the K-12 money up, but I don’t know how,” Frierson said. “We will have to see what the built-in needs (of the agencies) are.”

The state did end the year with a surplus of $177.5 million because growth for that 12-month period beat expectations. Those funds, with existing cash reverses, will provide the state more than $450 million in rainy day funds.

Click video to hear audio