By TED CARTER
Gov. Phil Bryant and legislative leaders received more bad news late last week in a warning from Treasurer Lynn Fitch to expect a $32 million to $40 million shortfall in money available for debt service in the new fiscal year.
The $111.5 million in special funds legislators thought they could use to pay debts in fiscal 2017 is actually $73 million to $80 million, Fitch said in an April 28 letter to Bryant. Fitch said she first alerted legislators in 2015 that special fund money for debt service would be “at most” $80 million. “I stand by that conclusion now,” she said.
The special money that can be earmarked to pay state debts is primarily derived from interest payments and loan repayments from unused money allocated for economic development incentives to such companies as Toyota, Alliant Techsystems (ATK) and Severstal Columbus (formerly SeverCorr), the Treasurer’s office says.
This money represents allocations for economic development projects and expansions that may not have materialized or, in the case of Toyota, were delayed, according to the Treasurer’s office.
Legislators thought the state had a pot of $70 million in special fund money it could tap for debt beyond the $80 million limit Fitch gave them in 2015, the Treasurer’s office said.
Here, said Fitch, is what happened with the $70 million special fund: $35 million makes up part of the $80 million limit cited in 2015; $16 million went toward plugging holes in the general fund the past three years; and the remaining $19 million is obligated to pay off specific bond issues.
“We no longer have the funds to make up the $31.5 million gap that SB 2918 (the debt appropriations bill) creates,” Fitch said.
Legislators in the past have worked around shortfalls on debt money by closing the allocating extra money the following year. Fitch warned of a couple problems with this approach.
First, she said, SeverCorr, ATK, Toyota and others are paying no additional money into the pot. “Once that amount is paid out, the fund will be depleted,” Fitch said.
Second, she added, “We should expect that there will be a large spike in debt service appropriations needed from the general fund beginning in 2018.”
Bryant and legislative leaders have two unappealing options, according to Fitch.
They can tap the rainy day fund from which Bryant has plucked $45 million since January or seek a “deficit appropriation” in the 2017 legislative session, Fitch said.
The rainy day find, officially known as the Working Cash Stabilization Reserve Fund, stands at about $400 million.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info