Mississippi’s budget appears safe from any more cuts, at least in the short term.
The state economist raised revenue projections Monday morning despite lower-than-expected revenue collections through the first four months of this fiscal year.
The new projection – $56 million, or an increase of 1.2 percent – comes as welcome news following two cuts last fiscal year.
In December 2015 and April 2016, economists lowered revenue projections, forcing Gov. Phil Bryant to reduce state agency budgets before the fiscal year ended in June, resulting in agencies cutting some services and even some employees.
By law, if revenues fall below projections, the governor must ensure the budget is balanced by decreasing state agencies’ budgets mid-year or pulling funds from cash reserves.
“In projecting general fund revenue, the Revenue Estimating Group took into account the current outlook for the economy, collections to date and legislative changes to examine each revenue source individually,” said state economist Darrin Webb. “This recommendation reflects continued modest improvement in the economy.”
Through the first four months of the fiscal year, which began July 1, the state has collected $41.2 million — or 2.51 percent — less than expected. But economists and political leaders have said the low revenues come as a result of unanticipated Department of Revenue expenses.
The revenue numbers reflect a $10.8 million adjustment made in July and August. Additionally, $10.2 million in film-industry rebates were paid in July, and $20.3 million in individual and corporate income tax refunds were also paid during the first quarter.
As Lt. Gov. Tate Reeves pointed out Monday morning, revenue estimates are fluid, which makes budgeting and deciding how much state agencies will receive in future fiscal years difficult. The system in place is designed to alert the governor in real time to any revenue shortfalls, but also to give lawmakers a sense of how much money will be available to distribute to state agencies and departments next fiscal year.
Those conversations will be made in appropriations committee meetings during the 2017 legislative session, which begins Jan. 4. By April, when the Legislature ends the session, state agencies typically know how much money they will receive before the 2018 fiscal year begins in July 2017.
In addition to the revised revenue estimate given for the current fiscal year, Webb gave lawmakers the anticipated estimate for fiscal year 2018 of $5.7 billion, which is $104.9 million or 1.8 percent above the current year’s estimate.
After moving to adopt the economists’ recommendations, Reeves and House Speaker Philip Gunn told the legislative committee that they might consider ignoring that 1.8 percent increase when planning for appropriations in the upcoming legislative session.
“The one thing we know for sure is that this number’s going to be wrong,” Reeves said. “The Revenue Estimating Group’s job is to give us their best estimate. Our jobs, as legislators, is to make sure we’re budgeting wisely. I believe we should adopt this, as projected. I then believe we, as a committee, should budget for fiscal year 2018 with an anticipated zero growth.”
Bryant, who said in September he did not anticipate having to cut the state’s budget before the end of the calendar year, attended the meeting Monday morning. When given the revised estimate for the current fiscal year, his reply was “Good.”
“Any number of economic circumstances could occur globally that could affect this, but we seem to be tied to what we adopt here. I always thought that was an unfair practice,” Bryant said. “If I were good enough to project exactly what the revenue of the state would be a year from now, I would be in the financial advisement industry, and you would be seeing commercials of my global industry. I know the leadership is doing a remarkable job.”
In addition to hearing estimates from economists Monday, the legislative committee voted to approve the appointment of new Legislative Budget Office Director Tony Greer, who is replacing current Director Debbie Rubisoff, who is retiring at the end of December. Greer will begin Nov. 21 to shadow Rubisoff.