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Cut programs, cut people

As I See It

There is universal agreement that the economy is in the ditch; however, there is some indication that it may be creeping back up on the road. Our state government’s budget is also in the ditch. Unfortunately, it is likely to remain there for the next few years.

Why won’t the state budget recover when the general economy emerges from recession? Because the Legislature took drastic measures during the last two years to keep from admitting that we were mired in the mud and now we must pay the piper.

Businesses take action to stay alive when hard times come. Usually that action includes laying-off employees. State government would rather have their teeth pulled than cut staff, and they didn’t. Thus necessary corrective measures were not taken and the hole got deeper and deeper. To keep up the pretense of OK-ness, idle funds have been appropriated, tobacco trust fund money sucked out and the rainy day fund drained. I don’t think they can keep the party going for another year.

Some might find consolation in knowing that Mississippi is not alone in its budget woes. According to a report issued by the Nelson A. Rockefeller Institute of Government in Albany, N.Y., state-tax revenues tumbled over 10% in the April-to-June quarter compared to the same period a year earlier. “This sustained revenue decline, which appears to be accelerating, is causing widespread and severe stress in state budgets across the country,” according to Nicholas W. Jenny, the author of the Rockefeller report.

States are looking under every rock to find sources of additional revenue as well as opportunities to cut expenditures. Raising excise taxes, particularly on cigarettes, is a favorite tactic. Like Mississippi, other states have also drained rainy-day funds. There are no easy answers to the problem.

During the next legislative session the subject of raising taxes is bound to come up. Through their elected representatives, Mississippians are going to be forced to decide between higher taxes and reduced government services. It is well to have given this subject some thought and make your wishes known before the emotionally charged issue arises.

Our commitment to a multi-year teacher pay raise and other fixed future obligations ties the hands of legislators somewhat. The cost of attracting Nissan has to be paid. Bonds sold to build prisons come due. Since legislators spend tomorrow’s dollars today, they have less flexibility when tomorrow arrives. Well, tomorrow is here.

In times like these it would be helpful to have an agreed set of state priorities. Unfortunately, that is not the case. And in fairness to the Legislature, perhaps it’s simply not possible to have that much consensus among elected officials.

I don’t sense willingness on the part of Mississippians to pay higher taxes. Since all the rabbits have been extracted from the fiscal hat over the last two years, I think this is going to be the year to face reality. State government is going to have to live within its means and that is likely going to mean staff terminations.

Our state government has grown steadily over the years to the point that, with the NAFTA-related job losses, there are more people working for the government than working in manufacturing. That statistic alone implies that there is room for staff cuts without interrupting vital government services. It won’t be easy, but it can be done. Besides, whoever said it was going to be easy?

Thought for the Moment — The key to success is for you to make a habit throughout your life of doing the things you fear.

— career development consultant Brian Tracy

Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.

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