As the nation comes to grips with the current recession, the biggest news in state government is the significant decline in tax revenues. Recently, we learned that for the 12 months ending next June, state revenue will be more than $200 less than we thought in October, and for the following 12 months we will be some $400 million short of the October estimate. As difficult as the situation is, there are economic lessons to be learned from our current budget problems.
During his two gubernatorial campaigns and all periods in between, Haley Barbour repeatedly lambasted his immediate predecessor, Ronnie Musgrove, for leaving office with “a $700-million hole in the state budget.” Gov. Barbour also bragged that he was able to close the budget hole “without raising anyone’s taxes” and that “more Mississippians are working than ever before.”
In fact, Gov. Musgrove’s term fell prey to the national recession of 2000-2001, the accompanying loss of jobs and Mississippi’s first period of declining tax collections since 1984.
Now, as the state economy slows in line with the national recession, we find ourselves staring at another decline in tax collections and another $700-plus-hole in the budget — next year’s $400-million shortfall in revenue plus $300 million in “one time money,” non-recurring revenues that have been scraped together from various sources throughout state government. In addition, struggling Mississippi businesses are laying off workers resulting in the lowest number of working people in the state since 1998. As a result, Barbour is pushing a $90-million tax on the state’ hospitals, apparently supporting an increase in the tax on cigarettes and has already instituted a higher tax on nursing homes.
Thank goodness the federal stimulus money will help us plug some budget holes and, hopefully, enable us to avoid draconian cuts to public services for the foreseeable future. These funds on the heels of the Hurricane Katrina relief funds have been a Godsend to Mississippi. While both the stimulus money and the Katrina money are non-recurring “one-time” sources, without this federal help Mississippi’s economy would be in far worse shape than it is.
The lesson to be learned from all of this is simple — while state policies can be helpful in attracting businesses and creating jobs, we are influenced far more by the national economy, and no Mississippi politician should take credit or blame for the vagaries of the national economy. Gov. Barbour is not to blame for our current economic plight. But, just as assuredly he cannot take credit for the boom that preceded the current decline, and blaming former Gov. Musgrove for the recession of 2000-2001 is just plain wrong.
Rep. Cecil Brown, a member of the Mississippi House of Representative from District 66 of Hinds County, contributed this Op-Ed column for the Mississippi Business Journal. For a public offical or newsmaker to contribute an Op-Ed column, contact MBJ Managing Editor Ross Reily at firstname.lastname@example.org or (601) 364-1018.