JACKSON — Last month, the Joint Legislative Budget Committee (JLBC) proposed a one-third cut to the Mississippi Development Authority’s budget for FY2002, a move economic developers say will be detrimental to the state’s progress.
Gov. Ronnie Musgrove proposed a $34.2-million budget for MDA. The JLBC recommended a reduction of $10.9 million, for an adjusted budget of $24.3 million for FY2002.
“Cutting one-third of the MDA budget, as recommended by the JLBC, will cripple our ability to bring jobs to our people, help local communities with their water and sewer needs and assist our existing businesses,” Musgrove said. “Such a drastic cut puts our economic potential in a stranglehold.”
MDA executive director J.C. Burns said his department is studying the proposed budget cuts to make adjustments.
“We have many programs and services to administer for economic development for the state,” Burns said. “Any cut of this magnitude will be difficult to manage.
“All dollars appropriated to MDA are an investment in our state and its communities. Without necessary funding, we will merely have to prioritize which programs and services are most important.”
State Sen. Jack Gordon (D-Okolona), chairman of the appropriations committee and member of the legislative budget committee, said all state agencies received budget cuts.
“The revenue that’s available to us is far down from what we expected,” he said. “We have so many built-ins that we have to take care of. We don’t have much left, so we had to cut every budget. We tried to take out all equipment purchases, out-of-state travel and vacant positions. It has hit some agencies harder than others.”
The budget for FY2002 is based on a 3.7% rate of growth, even though the growth rate is closer to 2%, Gordon said.
“If things don’t get better, the governor will probably have to reduce the FY2002 budget again,” he said.
If Mississippi were to accept a $93.9 million lump sum instead of a $120-million, 12-year settlement of a lawsuit against American Management Systems, a Virginia-based company that was unsuccessful in developing sufficient tax-collection software for the state, the money could be used to fund MDA, Musgrove has said.
But attorney general Mike Moore said that’s not the case.
“The settlement’s already done, signed and finished,” Moore said. “It was a $185-million settlement, with $30 million paid specifically to the tax commission over a period of years. Then, $5 million is for the ITS, $5 million is for attorneys fees, $15 million goes in an upfront payment that went into the general fund, and $130 million is left to be paid over 13 years. The first payment is June 25, 2001 and each June 25th thereafter until 2013.”
AMS was required to purchase a $130-million annuity from an insurance company, and was then required to transfer title of the annuity to the state to secure a $10-million annual payment, Moore said.
“The governor was talking about taking the secured annuity payments and selling them again,” he said. “It could be done, but it would be very cumbersome. All parties – the state, AMS and the insurance company – would have to sit down and agree to do it. Then you would have to negotiate again with AMS on the settlement amount. I’m sure they would attempt to negotiate downward if we reopen the settlement. Then you would have to try to sell that stream of income again. It’s possible to do, but I don’t think there is much legislative support to do that.”
State Rep. Bobby Moody (D-Louisville), a member of the legislative budget committee, said that probably won’t happen.
“No, I don’t see any support in the Legislature for selling an annuity for a lump sum,” Moody said. “It is not within the purview of the Legislature to do that without a change in the law. From what we understand from the attorneys, there’s no way to do that, and I’m not in favor of using one time money to shore up the budget.”
Besides, the $15 million up front payment has already gone into this year’s revenue stream, Moody said.
“We tried to really look closely at the budget, and cut budgets without directly affecting services that various agencies provide,” he said. “We did the same thing with MDA. I know it’s going to be painful, but we have to stick with the essentials this year to stay within the budget. When we structure the budget according to the law, all the money that we can appropriate against has to be in hand, or we have to have projections that are real at the time of the recommendations. On June 30, we have to pay all outstanding bills, and whatever we have to do as a body and as servants of the people, that’s what we have to do.”
Contact MBJ contributing writer Lynne Wilbanks Jeter at email@example.com or (601) 853-3967.