Bryant orders fourth mid-year budget cut

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Rogelio V. Solis, AP

Mississippi Gov. Phil Bryant, foreground, and Lt. Gov. Tate Reeves in the House chamber.

Gov. Phil Bryant on Friday ordered a fourth mid-year budget cut this fiscal year as tax revenues continue to fall below projections.

The $20.5 million cut will trim most state agencies’ budgets by about 0.5 percent. A list of agencies excluded from the cuts was not immediately available, but the Division of Medicaid was excluded.

Bryant also ordered a transfer of $39 million from the Rainy Day Fund, the state’s largest reserve fund, meaning he has now pulled the statutory maximum $50 million from the Rainy Day Fund for this fiscal year.

If additional transfers from that reserve are needed, he’ll need to get legislative approval.

“Like hardworking Mississippi families and businesses, government must live within its means,” Bryant said in a statement. “It would be irresponsible to spend money we do not have. As long as I am governor, we will spend taxpayer money prudently, conservatively and in a manner that maximizes the effectiveness of available funds.”

How much was each agency cut? Click here to see the list.

Three of the four cuts this fiscal year – which runs July 1, 2016, to June 30, 2017 – were made to offset lower-than-expected revenue collections. A fourth cut of $56.8 million was made in September 2016 to offset “an accounting error” made during last year’s budgeting process.

• March 2017: $20.5 million cut, $39 million transfer from Rainy Day Fund

• February 2017: $43 million cut, $7 million transfer from Rainy Day Fund

• January 2017: $50.9 million cut, $4 million transfer from Rainy Day Fund

• September 2016: $56.8 million cut for “accounting error”

Friday’s cut was announced just hours after the Joint Legislative Budget Committee lowered the current fiscal year’s revenue estimate by $70 million. The committee also announced there is $174.6 million less than expected to craft next year’s budget.

“It’s going to be a very challenging budget this year for virtually every state agency,” Lt. Gov. Tate Reeves said on Friday. “I don’t think that should come as any surprise to anyone. That’s been certainly conveyed to many folks the past three or four months. But it’s going to be even more challenging.”

The state’s revenue collection woes are not new. In the past 18 months, the state has met revenue projections just twice: May 2016 and August 2015.

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.

In addition to the 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 for the state, 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.

As the state struggles to pay its bills this current fiscal year, lawmakers are meeting under the dome all weekend to finalize the budget for next fiscal year. When revenues do not meet projections and the governor is forced to compensate with mid-year cuts, it muddies the budgeting process for the next year, Senate and House Appropriations chairmen have said this session.

The cuts put “extra confusion in the process. You have to start at whatever the lowest amount is,” Sen. Buck Clarke, R-Hollandale and Senate Appropriations chairman, said at a Mississippi Economic Council breakfast in January.