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CRAWFORD: Lies, statistics and balanced budgets

money“Figures often beguile me,” wrote Mark Twain, “particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: ‘There are three kinds of lies: lies, damned lies, and statistics.'” These days he might have added another with regard to the public sector – “lies, damned lies, statistics, and balanced budgets.”

The Legislature is about to conclude its 2013 session and authorize a “balanced budget” for fiscal year 2014. “Balanced” means projected revenues will match or exceed authorized expenditures.

Truth is, the Legislature does not know if the overall state budget and agency sub-budgets will balance or not. That’s why the state maintains a “rainy day fund.” That’s also why the Governor has authority to slash agency budgets should revenues fall substantially below target.

The revenue side of the budget comes from best-guess projections provided by economic experts. State leaders use that input to set a revenue target. Sometimes targets are reasonably accurate, as this year’s seems to have been, sometimes not. When revenue fell short in 2009, Governor Haley Barbour had to slash budgets 9.5%. Next year the unknown impact of new tax credits could short revenues.

Then there are agency deficits arising from programs with uncontrollable costs such as Medicaid, corrections, and emergency management. The Legislature usually covers these deficits during its next session.

There are also tricks used by legislators to make budgets seem in balance. The dominant one is to use “one-time money” to fund recurring costs. This practice is what dried up the billion dollar tobacco settlement trust fund; the Legislature kept drawing down those funds to cover recurring expenses. Over $400 million in recurring expense is covered by one-time money in the current budget.

“Balanced budgets” — trust them like you do politicians.

Bill Crawford (crawfolk@gmail.com) is a syndicated columnist from Meridian.

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