Economist: State fiscal outlook dire
The Joint Legislative Budget Committee concluded its budget hearings this afternoon with a 1.99 percent increase in funds from the Mississippi Insurance Department and a plea for new software from the Mississippi State Tax Commission.
Commissioner of Revenue J. Ed Morgan told lawmakers that the corporate tax collections component of the 35-year-old software the MSTC uses has crashed and the sales tax collections component is dying.
“The prognosis of our patient is bleak,” Morgan said.
The Legislature promised funding for the $30 million software during the last legislative session, but the money wasn’t there when the FY10 budget was finalized.
House Speaker Billy McCoy,D-Rienzi, told Morgan the state would find a way next session.
“We will give you the ways and means this year,” McCoy said. “You’ve convinced us thoroughly.”
The dire straits of the MSTC presentation carried into the overall revenue forecast state economist Dr. Phil Pepper gave to end the four days’ worth of hearings.
“We’ve lost 50,000 jobs in Mississippi the last year and a half,” Pepper said. “We had more people employed in 1997 than we do now.”
Pepper said the economic outlook for calendar year 2010 is still one of negative growth for the state and the national economy.
Revenues for FY2010, which started July 1, are $31.7 million (about 5 percent) below the sine die estimate made in June. Year-to-date, revenue is off more than $40 million compared with 2008.
Pepper cautioned lawmakers that reports of economic indicators experiencing an uptick since May are false. Rather, he said, their rate of loss has slowed. As opposed to heading up, they are heading downward more slowly.
“Restructuring may be required in state and local government (to cut costs),” Pepper said. Pepper’s assessment comes just a few hours after IHL Commissioner Dr. Hank Bounds told the JLBC that consolidation of some functions within the university system may be necessary to offset a loss of state funding.
The Revenue Estimating Group is scheduled to meet in October once September revenues are available. September marks a critical month for corporate tax collections. The REG will set a revenue estimate for FY11 in October, the JLBC will meet in November to review it and it will be released and adopted by the committee the first week of December.
Pepper’s presentation makes it likely the numbers then won’t be any prettier than they are now.
“We have hard times ahead,” he said.