Another state budget cut looming

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Another mid-year budget cut may be needed after Mississippi missed its projected revenue collection total for the eighth straight month in January.

Legislative spending chairmen Rep. John Read, R-Gautier, and Sen. Buck Clarke, R-Hollandale, said on a radio show Thursday morning the cuts may be necessary after January collection reports show an $18 million shortfall.

That $18 million shortfall, added to the other six months of this fiscal year means the state has missed original projections by $107.5 million this fiscal year.

Gil Ford Photography

Sen. Buck Clarke, R-Hollandale.

“Yeah, it looks that way,” Clarke said when asked by Supertalk radio host Paul Gallo if the governor might have to make cuts again. “When the January numbers came in, that was really disappointing. We had our fingers crossed we wouldn’t have to cut again.”

Gov. Phil Bryant already directed special cuts in January to help offset the revenue shortfall to that point: a $51 million cut that reduced a vast majority of state agencies’ budgets by 1.45 percent. He also transferred $4 million from the Rainy Day Fund, the state’s major reserve fund, to the general budget.

There have been other pressures on the state budget this fiscal year. In September, Bryant ordered a cut for all but four state agencies to compensate for a $56.8 million “accounting error” made during the budget writing process last spring.

Tax revenues feed the state’s general fund, which finances state agencies and their daily operations. When revenues run below projections, the governor and Department of Finance and Administration Director Laura Jackson compensate by cutting state agencies’ budgets or transferring reserve fund money to the general fund.

The state’s revenue collection woes are not new. In the past 17 months, the state has met revenue projections just twice: May 2016 and August 2015.

In addition to the two cuts this fiscal year, Bryant cut the budget two times last fiscal year and pulled around $110 million from the state’s Rainy Day Fund to deal with lower-than-projected tax revenue collections.

The budgeting system in place, while fluid and not exact, is designed to alert state fiscal officials in real time to any revenue shortfalls. It also gives lawmakers a sense of how much money will be available to distribute to state agencies and departments next fiscal year.

Clarke and Read are working with the Legislative Budget Office on crafting next fiscal year’s budget. In less than a month, lawmakers will be asked to consider appropriations bills for each general fund agency for next fiscal year. When revenues do not meet projections, it muddies the budgeting process for the next year, Clarke said.

The cuts put “extra confusion in the process. You have to start at whatever the lowest amount is, which right now, is the total after last week’s cut,” Clarke said at a Mississippi Economic Council breakfast last month.

There has been discussion about adjusting the way the state creates its general fund budget. The projection model, used by Mississippi for decades, recently has been criticized by state leaders.

“Revenues aren’t coming in like we projected,” House Speaker Philip Gunn said in a statement after last month’s cuts. “This is why we have brought performance-based budgeting in and why we are looking at different ways to fund education. Basing budgets on projections is something we need to try and get away from to the best of our ability. That is why we released our Legislative Budget Recommendation based on zero growth.”