State revenue coming up short
The Clarion Ledger
May 5, 2009
Mississippi lawmakers return to work Wednesday to craft a state spending plan from significantly decreased tax collections that threaten more budget cuts.
Revenues dropped sharply in April as the state collected $468.5 million for the general fund. That's $88 million, or nearly 16 percent, less than expected.
Lawmakers are hoping that federal stimulus dollars will minimize future damage to state agencies that already have had to make two rounds of cuts in the current fiscal year. They also are expected to generate more revenue by approving a 50-cent hike to the cigarette tax.
Revenue from sales, personal income and corporate taxes decreased by double-digit percentages in April. The numbers indicate Mississippians are earning less and spending less as a national recession persists, economists said.
From last July through the end of April, the state collected $119.5 million less than it did during the same time period a year before, according to the State Tax Commission.
Mississippi is $249.7 million, or 6.73 percent, below estimates for the current fiscal year that runs through June 30.
"Even considering the decline in the economy over the last several months, this was worse than we expected," State Tax Commission spokeswoman Kathy Waterbury said.
Economist Marianne Hill said other states have had more severe shortfalls. But she added Mississippi's shortfall probably will exceed $300 million by the end of the current fiscal year.
Hundreds of millions of federal stimulus dollars for education and Medicaid will help free up money for use in other areas, Hill said. The state anticipates receiving $2.8 billion to be used over a multi-year period.
But Republican Gov. Haley Barbour is warning that stimulus dollars won't solve all of the state's problems. He's urging conservative budgeting as legislators end their month-long recess.Deeper budget cuts may be needed in the current fiscal year, he said.
"Across the board, economic trends are running against us," Barbour said. "Actual revenue collections are falling far short of even very recent revenue estimates. Budgets based on these estimates may have to be cut further."
Lawmakers took a break April 1 to give themselves time to learn more about how federal stimulus dollars can be used. House and Senate negotiators agreed last week to raise the state's 18-cent cigarette tax to 68 cents per pack, a proposal that requires approval from the governor once it moves through the full Legislature.
The recess has produced tense moments between House and Senate leaders haggling over the budget. They've been unable to agree on how much to raise hospital taxes to help pay for Medicaid.
Agency leaders recently received conflicting letters from key lawmakers - one that predicted double-digit budget cuts, and another that pledged to keep them at level or increased spending.
The confusion has left many agencies in limbo. Some agency directors are holding off on hiring decisions until they know how much money they'll have to work with.
Insurance Commissioner and State Fire Marshal Mike Chaney said he's waiting to see if his agency's budget bill allows him to shuffle money to provide disability insurance for volunteer firefighters. He's also not sure he'll be able to hire interns and has held off on announcing a new deputy commissioner.
Chaney said he doesn't know what he will do if more cuts are made."If they cut us, you kill the goose that laid the egg," he said, referring to money generated by insurance premiums.
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