A $102 million drop in projected general fund revenue for next fiscal year complicates legislative negotiations over spending bills, which must be approved by Monday.

The new projections released Friday by the state’s Revenue Estimating Group means the total Fiscal Year 2017 budget will come in at about $5.6 billion. Fiscal Year 2017 begins on July 1.

If the new projection of a $101.7 million decline in revenue holds true, the state would rack in less than the previous year for just the fourth time in 40 years.

The Revenue Estimating Group includes the state treasurer, the state economist, the department of revenue, the department of finance and administration and the legislative budget office. Their new estimate, updating projections made a year ago, will be taken into account as lawmakers spend the weekend tweaking appropriations bills to balance the FY 2017 budget.

Lt. Gov. Tate Reeves, R-Florence
Lt. Gov. Tate Reeves, R-Florence Credit: Mississippi Today

“(The projection) certainly complicates the budget process,” said Lt. Gov. Tate Reeves, R-Florence. “It’s going to make it even harder to get a budget done in the next day or so, but it also conforms to what we’ve been saying for five years or so: We’re simply not going to spend money we don’t have.”

A Senate bill endorsed by Reeves and the chairmen of both the House and Senate appropriations committees would help offset the negative projections, pulling assessments and fees brought in by state departments that fall into the special funds category into the general fund instead. The bill, dubbed the “Budget Transparency and Simplification Act,” would also prevent state agencies from charging fees to other state agencies.

Assessments and fees from 15 state departments – including the public service commission, the secretary of state’s office, and the insurance department – would be flowed into the general fund instead of staying in special fund cash balances, where they currently reside.

Opponents of the bill, like Rep. Jay Hughes, D-Oxford, have said the proposed bill would pave the way for franchise tax cuts. But Sen. Buck Clark, R-Hollandale, chairman of the Senate appropriation committee, said the bill has nothing to do with franchise or corporate tax cuts.

If the bill passes in its current form, a one-time total of $104 million would be deposited into the general fund for either the current fiscal year or the next fiscal year, and the general fund will rake in $19 million every year moving forward. That $19 million, Clark said, is what currently comes out of the general fund budget and goes to special fund departments.

Clark and Rep. Herb Frierson, R-Poplarville, and chairman of the House appropriations committee, said they first developed the budget approach four years ago.

“We began thinking about how we can be consistent all across government and how we could put each agency when they’re coming to us with their budget on the same foot,” Clark said. “I talked to Herb (Frierson) about it, and that’s when we came up with the idea: Turn what special agencies you could into general fund agencies.”

The projection released Friday, Webb said, excluded what economists and lawmakers call unanticipated transfers, like court settlements and increased Medicaid premiums, or other monies not planned for during the budgeting process. In the current fiscal year, Mississippi has received $108.5 million in unanticipated transfers, including a $66.2 million dollars from court settlements from the attorney general’s office. Last fiscal year, the state received just $50 million from unanticipated transfers.

Reeves told reporters Friday that in the past seven fiscal years, Mississippi has received about $350 million of unanticipated transfers. During a joint legislative budget meeting Friday morning, Reeves, who was on the budget estimating group for eight years prior to becoming lieutenant governor, asked pointed questions to state economist Darren Webb about the missing projections of unanticipated transfers.

Reeves called Friday’s projection “pessimistic,” and he said he believes the state will receive a substantial amount of unanticipated transfers. Despite the negative projections, Reeves is confident the legislature will reach an agreement before Monday’s budget deadline.

“We’ve got a couple days to continue to work out details with our friends and counterparts in the House,” Reeves said. “We’ve had very productive conversations. We don’t have a deal yet on any of these issues, but we’re working on it.”

The deadline to file conference reports on appropriations bills is Saturday, while the deadline to pass the bills is Monday. Both the House and Senate are scheduled to work Saturday and Sunday to meet the deadlines.

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Adam Ganucheau, as Mississippi Today's editor-in-chief, oversees the newsroom and works with the editorial team to fulfill our mission of producing high-quality journalism in the public interest. Adam has covered politics and state government for Mississippi Today since February 2016. A native of Hazlehurst, Adam has worked as a staff reporter for AL.com, The Birmingham News and The Clarion-Ledger and his work has appeared in The New York Times, The Washington Post and Atlanta Journal-Constitution. Adam earned his bachelor’s in journalism from the University of Mississippi.