‘It could have been a lot worse’: Legislative leaders say budget leaves most state agencies on solid footing

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Eric J. Shelton/Mississippi Today

The Mississippi Capitol in Jackson, Miss., on Tuesday, June 30, 2020.

Legislative leaders say despite the pandemic, the state budget is in a good place and do not foresee state agencies needing to make any layoffs.

The budget approved by the Legislature in late June and early July provides state agencies $113.5 million, or 1.8% less funds for the current fiscal year than they received during the prior year. The new budget year began July 1.

At one point, legislative leaders were expecting much deeper cuts because of the economic slowdown caused by COVID-19. Officials believed the shutdown would result in large reductions in state tax collections. But thus far, the coronavirus shutdown has not resulted in those big reductions in state revenue collections.

“We’re looking at about 50% of agencies taking about a 5% cut, only about 1% that we didn’t cut and the rest had about a 3% cut,” House Appropriations Chair John Read, R-Gautier, said in an earlier interview. “I’m thankful we wound up in this position. It could have been a lot worse.”

Senate Appropriations Chair Briggs Hopson, R-Vicksburg, said “I am not aware of any agency that would actually be forced to lay off employees because of cuts.”

The total state support budget for the current 2021 fiscal year is $6.25 billion. The state support budget is built primarily on general taxes, such as on retail items and on income. It is the portion of the budget where legislators have the most discretion in how they spend the funds.

The entire state budget, including federal fund and special funds, is $21.8 billion. The Legislature usually has less discretion in spending those funds. The federal funds are designated for specific areas by the U.S. Congress, such as for Medicaid and Temporary Aid for Needy Families. Special funds are derived through fees or taxes to fund specific agencies. For instance, accountants pay a fee for the agency that regulates them. The largest special fund agency is the Department of Transportation that is funded primarily through the 18.4-cent per gallon tax on motor fuels.

In terms of state support agencies, the universities were cut $32.8 million or 4.6% while the 15 community colleges were cut $14.9 million or 6%.

In a statement, Kell Smith, a spokesperson for the community colleges said, “We do recognize the difficult decisions the Legislature had to make when it wrote the budget based on many unknowns at the time.  That said, we are grateful for the money appropriated to the community colleges.”

Smith continued, “At this time, we are optimistic about being able to provide affordable education and training opportunities to many thousands of Mississippians without a reduction in services.  Hopefully, we will not experience mid-year cuts which could force difficult decisions to be made at that time.”

Mid-year cuts would occur if revenue came in at a rate less than the projection used to construct the budget.

The state health department, which has been beset with dealing with the coronavirus, was cut $1.2 million or 2% in state funds. Much of the health department funding comes from federal and special funds.

State Health Officer Thomas Dobbs said the agency for the most part has the funds, through federal appropriations, to deal with the coronavirus, but that other aspects of what the agency does could be impacted by the cuts.

Dobbs said the funds will make it “a challenge” to continue many of its core non-coronavirus functions, such as combatting sexually transmitted diseases and providing tuberculosis treatment.

“We understand it is a tough budget year..,” he said. “We really depend on that money for being in the community and taking care of gaps in the health care system for people who are most vulnerable…We will continue to try to meet our mission the best we can.”

Medicaid, another major expense for the state, was aided by an increase in federal funding, making it easier to reduce state funding $32.1 million or 3.4%.

Almost a month since the new budget year began, parts of state government remain unfunded by the Legislature. Gov. Tate Reeves vetoed large portions of the $2.5 billion education budget, which was cut $60.7 million. Reeves issued the partial veto because the Legislature did not fund a program to provide bonuses to teachers and faculty in top performing and improving school districts.

And the Legislature left without funding the Department of Marine Resources, which provides oversight and law enforcement services on the Gulf of Mexico. DMR was not funded because of a disagreement between House and Senate leaders over how much oversight authority the Legislature will have of federal money the agency receives. Marine Resources receives only about $1 million in state funding – also depending on federal and special funds for the bulk of its money.

Marine Resources is still providing core services, though, it is not clear how long that can continue. And Reeves said K-12 schools can continue to operate because they are a constitutional function that must receive state funding regardless of the action of the Legislature.

But is not clear whether the fact that no money is currently appropriated to the school districts, based on the governor’s veto, will impact the amount of the next round of state funding the schools receive in August.

Reeves has said he intends to call legislators back in special session to deal with those budgets. But he said he wants to wait because more than 30 legislators tested positive for COVID-19 earlier this month soon after they left the Capitol on July 1.

He said he “most likely” would have already brought the Legislature back if not for the COVID-19 outbreak.

“If is just not safe to do that,” he said recently.