Despite unprecedented revenue growth, both the House and Senate have put forth state budget proposals for the coming fiscal year that spend less state funds than what was appropriated during the 2021 session.
But Senate Appropriations Chair Briggs Hopson, R-Vicksburg, cautioned, “We are far from the finish line. This is just the starting line.”
Last year the Legislature appropriated $7 billion in state support funds for education, health care, law enforcement and for other vital needs that are funded with state general fund tax collections and other state funds. Both the House and Senate have passed budget plans of $6.6 billion.
The action taken earlier this week is the opening salvo for the 2022 session in developing a budget for the budget year starting July 1. The final product will be negotiated between House and Senate leaders in late March during the final scheduled days of the 2022 legislative session.
“Yes, I’m sure (spending) is going to increase in negotiations — it always does,” said House Appropriations Vice Chair Karl Oliver, R-Winona.
In developing the budgets, legislators are dealing with unprecedented growth in state tax collections. In the past fiscal year, the state collected $1.1 billion more than was budgeted and is on pace to do about the same for the current fiscal year.
Those surpluses are fueling discussions in both chambers of a tax cut.
READ MORE: Inside the income tax cut battle between House and Senate leaders
While the recent action might be “the starting line,” the proposals still indicate the conservative approach leaders apparently are taking in developing a budget. Both proposals do little to address the funding shortfall in the Mississippi Adequate Education Program, which provides the basics of operating local school districts. It would take about $360 million in additional money to fully fund MAEP, a funding formula set into law by the Legislature.
The budget also does not address the possibility of expanding Medicaid as is allowed under federal law to provide health care coverage to primarily the working poor. House Speaker Philip Gunn has indicated that he would not support expanding Medicaid.
Plus, the two budget plans, as they passed both chambers in their original forms, do little to address the rising costs agencies face from inflation.
Hopson conceded that moving forward inflation needed to be factored into the budgets.
“It is definitely a factor…(to) determine how far dollars will go,” said Hopson.
Oliver said, “Everybody’s aware of inflation — that’s a big topic of conversation right now.” He said inflation is part of what’s driving proposed pay raises for Department of Public Safety law officers and others in the budget.
Both Democrats and Republicans expressed concern that pay raises for state employees are needed during the current climate where salaries are being increased in the private sector to attract workers. But Hopson said safeguards are in plan to help ensure agency heads do not exceed their authority to provide pay raises.
“There seem to be a real concern about employees being overpaid and agencies trying to pay their employees more,” said Sen. Hob Bryan, D-Amory. “…It is very easy to see the cost of a salary. That is a dollar amount. We know the amount. We can deal with it. What we don’t see is the real cost of the key people in government, the super competent. When those people go, you incur a lot of other costs that you do not see in the cost of their salaries.”
The budget plans include $25 million for state employee pay raises. The intent of the funds is to ensure all employees are paid at least the minimum salary that they should receive under a new compensation system developed by the state Personnel Board. About 19,000 of the 24,000 Mississippi state employees who fall under the state Personnel Board guidelines received a raise of up to 3% in January to put their salaries in line with the new compensation plan, entitled SEC2. The $25 million will try to complete that realignment, Hopson said.
The largest new expenditure in both the House and Senate proposals is to fund the teacher pay raise plans that passed earlier this session. The Senate plan has about $170 million for its pay raise proposal with the plan to provide another $45 million raise in the 2023 session. The House has about $215 million for its plan.
On a separate, but related track, legislators are also working to decide how to spend $1.8 billion in federal COVID-19 relief funds. Those funds can be spent on water and sewer improvements throughout the state and for various COVID-19 related items. The final decision on how to spend those funds, like the overall budget, will likely be decided in the final days of the session, which is scheduled to end in early April.