Connect with us
[the_ad_placement id="manual-placement"] [the_ad_placement id="obituaries"]


Barbour Urges Legislators to Make "Long-Term" Plans




Listen to this article

  • The Plan would spend $58 million more in FY 2012 than was spent in FY 2011.
    • The Plan would spend $507 million in non-recurring revenue on recurring expenses in FY 2012.
    • The Plan would leave only $155 million in reserve funds for FY 2013 and beyond.
    • The Plan has added $130 million more revenue to the budget since LBR was adopted in December, including $100 more in non-recurring revenue.
    Below is the text of the letter Governor Barbour sent to legislators. To download the entire letter, complete with attachments, in PDF format, click HERE.
    March 21, 2011Dear Members of the Legislature:STATE OF MISSISSIPPI – OFFICE OF THE GOVERNOROver the weekend, the Chairs of the House and Senate Appropriations Committees, Senator Doug Davis and Representative Johnny Stringer, worked toward a  tentative conference agreement to appropriate $5.548 billion in FY 2012 (the Conference Plan).  Let me say this first: I appreciate the hard work and leadership of both men.  Representative Stringer is an experienced legislator with whom I have worked closely during my two terms as Governor, and Senator Davis is one of the most capable young leaders in our state. Both chairmen are committed to their vision of what is best for our state. However, I am not willing to support their revenue plan for FY 2012.On Thursday, I shared with you my concern about the FY 2012 budget as it currently stands and promised a detailed budget analysis for your review. The fundamental problems with the Conference Plan are:• The Plan would spend $58 million more in FY 2012 than was spent in FY 2011.• The Plan would spend $507 million in non-recurring revenue on recurring expenses in FY 2012.• The Plan would leave only $155 million in reserve funds for FY 2013 and beyond.• The Plan has added $130 million more revenue to the budget since LBR was adopted in December, including $100 million more in non-recurring revenue.As a baseline, it is important to compare the proposed Conference Plan to actual General Fund equivalent appropriations in FY 2011 and the Legislative BudgetRecommendation (LBR) for FY 2012. In FY 2011, total General Fund equivalent spending was $5.490 billion. In December, the LBR recommended $5-417 billion for FY 2012. Spending in the Conference Plan would exceed spending in FY 2011 by $58 million and would exceed spending proposed in the FY 2012 LBR by approximately $130 million. Further, $100 million of non-recurring revenue has been added to the Conference Plan since the LBR was adopted in December.What has happened since December that we need to spend $130 million more in FY 2012, including $100 million more non-recurring revenue? Since December, school districts have reported that they will have $86 million available in federal Ed Jobs money for use in FY 2012, and that is over and above roughly $470 million in district maintenance funds they had as of June 30, 2010. These facts suggest we should spend less not more in FY 2012!The Conference Plan not only spends too much on its face, but it also spends too much non-recurring revenue. While our past budgets have included some non-recurring revenue, the Conference Plan throws caution to the wind by proposing spending $507 million in non-recurring revenue in FY 2012. Almost 10 percent of the proposed budget would be funded with non-recurring revenue. (See attached summary).Our economic outlook has not improved since December such that it would support spending this additional money now instead of saving it for FY 2013 and beyond. In fact, our economic outlook is even less positive today than it was in December. In the fall of 2010, unemployment in Mississippi was 10.2 percent; today it is still 10.2 percent, literally unchanged. In December, a gallon of gasoline cost about $2.81; today it costs about $3-44, a 22 percent increase in 3 months. In December, the world economy was by no means stable, but it is even less so today because of turmoil in the Middle East and the tsunami and nuclear event in J apan. A£, I have said repeatedly, Mississippi is not immune from challenges created far beyond our borders.The Conference Plan relies too heavily on raids on special funds. We have been trying to get away from this bad budget practice, yet the plan continues to take money from agencies such as the Department of Insurance and Public Service Commission, simply because those agencies have “special funds.” The plan also raids more than $9 million from the Unclaimed Property fund. This fund actually contains property “unclaimed” by the citizens and businesses of our state; it is not our money. Further, the Conference Plan calls for spending the balance of the Capital Expense Fund for recurring expenses.  The fund exists to pay for one-time capital expenditures, not recurring expenses.The $507 million in non-recurring expenses do not even include the more than $100 million that is included in the 2012 budget because the 2 percent set-aside rule is not followed and because the practice of accelerated collection of FY 2013 July taxes in June of FY 2012 is continued. These two provisions, if followed in FY 2013, would make the problem worse by more than $100 million, and bring the total to about $615 million.On top of overspending non-recurring revenue sources, the House plan shortchanges debt service by $15 million, even though we all know debt service must and will be paid.  Building insurance is another built-in deficit that we must be responsible for at an estimated cost of $7.3 million. The latest House budget proposal shortchanges the Division of Medicaid by some $15 million below the most conservative estimate for this agency. Even worse, to fund Medicaid at this conservative estimate would require costsavings that, at least for now, the Legislature has been unwilling to make. These deficits push our structural imbalance to more than $650 million.To deal with this huge structural shortfall in FY 2013, the Conference Plan would leavethe State with only $155 million in reserve funds. (See attached chart).That means that the State will face a deficit of almost $500 million for Fiscal Year 2013.  At this level, general fund revenue would have to increase by 10.8 percent just to cover this structural shortfall. And 10.8 percent growth on the heels of an economic recession and in the face of $4 gasoline is obviously unrealistic; it also represents almost eight times the Revenue Estimating Committee’s current estimate for state revenue growth.Let me be blunt: to shore up this gap in FY 2013, our successors will be forced to (i) drastically cut funding to essential government services such as education and public safety, (ii) significantly raise taxes or (iii) worst of all, do both.I will not support leaving my successor with a budget hole like I inherited. If you choose to leave my successor and the next Legislature with this dilemma, it will be against my advice. I believe it is a decision you and the people of Mississippi will regret.Fortunately, this is not a path we must travel. There is a simple solution to the overspending in the Conference Plan: Spend less of our reserve funds and, just as importantly, actually cut state spending. In my EBR, I provided a comprehensive road map for achieving significant savings that the Legislature has, to this point, ignored.First, consistent with past practice, I included $65 million of the $96 million available to school districts through the Education J obs Funds in my FY 2012 budget proposal. However, neither the House nor the Senate has been ~villing to reflect federal Education Jobs Funds in the FY 2012 budget. As a result, the Conference Plan proposes spending an extra $65 million in state money even though districts recently self-reported they will have $86 million in federal Education Jobs Funds available for use in FY 2012.Secondly, my executive budget recommendation included proposals to achieve $60 million in cost-savings in the Medic.aid programs – proposals the Legislature has yet refused to consider. The most significant proposal is to roll back provider rates for hospitals to FY 2010 levels and freeze the rate for nursing homes at current levels. These reductions are clearly reasonable, considering that Mississippi’s hospitals and nursing homes are some of the best paid in the country.Both houses have proposed significantly more funding for the Department of Mental Health than I am recommending. As has been made clear by the recent Department of Justice action, we need to move to home- and community-based care instead of relying on costly and less effective institutionalizations of some of our state’s neediest citizens.These are but a few examples of the cost savings that we can achieve in state government. My executive budget recommendation included ideas on how the statecould save real dollars while increasing efficiency, both in the short- and long-term. Together, we can find others.Know that I don’t want to leave my successor or the next Legislature a budget hole of up to $650 million, or about 14 percent of anticipated general fund revenue for FY 2012. I inherited such a shortfall, and it took two years to dig out. I don’t think you want to face this hole next year, either. Returning spending to that agreed to in the LBR would help tremendously. It would not only reduce FY 2012 outlays by more than $100 million but would also increase reserves available for FY 2013 accordingly.Mississippi cannot afford for its leaders to spend today and slash and tax tomorrow. I hope you will join me in crafting a responsible budget for next year.Sincerely,Haley Barbour]]]]> ]]>

    See a typo? Report it here.
    Continue Reading