Budget problems have caused loads of turmoil and questions for Mississippi legislatures.
To balance the budget that ended last week, the Mississippi Legislature gave Gov. Phil Bryant permission to use the state’s rainy-day fund. The governor took $63 million to make up for a shortage of tax revenue.
Having taken another $45 million from the rainy-day fund earlier in the year, that means the state’s just-in-case money has been reduced by about 25 percent this year, to the $290 million range.
Soon after approval was given, Attorney General Jim Hood said that the state has received the first $150 million from BP economic damages. The fear is that lawmakers may try to balance the state budget with that money, where it should go
to the areas that were affected by the catastrophe.
The money is supposed to cover economic damages caused by the 2010 explosion and fire on the Deepwater Horizon oil rig in the Gulf south of the Mississippi coast. The rig spilled millions of gallons of oil into the Gulf.
Lawmakers have been told to expect another tough year of tax collections in the coming 12 months. In anticipation, they set the new budget with $50 million less in spending. That’s a start, but if tax collections continue to trend lower, the state may be using the rainy-day fund again next spring.
Given all this, and also given the fact that the Legislature has approved tax cuts in each of the past two years, it looks like the Republican majority is better at chipping away at revenue than it is at expenses.
The state’s biggest budget problem is that spending continues to grow. Perhaps the Republican bet is that reducing taxes will spur growth in the state economy. Maybe that will happen, but maybe not. It certainly didn’t in Louisiana and Kansas, two states that recently passed large tax cuts.
The Legislature’s greatest challenge still lie ahead. Unless tax receipts rebound significantly, much larger spending cuts will have to be made.
