Magnolia Marketplace

Gov. Haley Barbour announced today that an additional $41 million was disappearing from the state’s budget for fiscal year 2010 because of spiraling state revenue collections.

Since the budget year started last July, $499.1 million has been cut.

“Hopefully we’re making the last cuts of the year,” Barbour said.

The latest round of cuts comes just a few hours after the Joint Legislative Budget Committee lowered  the revenue estimate for FY2010 and FY2011. FY10’s figure was reduced to $4.43 billion, and FY2011 was set at $4.45 billion.

Barbour said he was “skeptical” revenue in FY2011 would reach $4.45 billion. Legislators are crafting that plan now.

Barbour signaled his opposition to any budget that comes to him from the Legislature that would waive the stipulation, commonly called the “2 percent rule,” that sets aside 2 percent of appropriations for the rainy day fund. Legislation that violates the 2 percent rule, Barbour said, can expect his veto.

Aside from the state’s dismal fiscal situation, Barbour touched on a few other topics. Among them:

• The healthcare bill President Obama hopes to pass this week would be “very bad for Mississippi,” he said. House Speaker Nancy Pelosi’s plan to pass the bill without a vote wasn’t very popular with Barbour, either. “That’s mind-boggling to me,” he said.

• He urged the House to pass the reauthorization for the Mississippi Department of Employment Security. If the agency is reauthorized by June 30, those currently drawing unemployment will no longer do so. Barbour dropped strong hints that he would call a special session if lawmakers end the regular session without reauthorizing the agency.

• We asked Barbour what was next for The Aerospace Alliance, a four-state consortium that seeks to expand the Gulf South’s aerospace industry, which suffered its first big loss last week when Northrop Grumman/EADS pulled out of the KC-X Tanker program. He said some pretty interesting things, which we’ll chronicle in a story in next week’s MBJ.

We reported last week that Gov. Haley Barbour has a big fundraiser coming up Sunday after next whose price tag would suggest it’s going to be used to fund a very expensive race.

This weekend’s meeting of the National Governors Association in Washington did nothing to slow down the rumor mill. Barbour told the Associated Press he had still made no firm plans one way or the other about running for the White House but did say, “If you see me losing 40 pounds that means I’m either running or have cancer.”

Magnolia Marketplace believes Barbour when he says he is focusing on this fall’s midterm elections and the next wave of gubernatorial races and not giving much serious thought — yet — to a presidential run. We also believe, though we have nothing to confirm it, that Barbour really, really, really wants to run for president, and he thinks he would have a good shot at winning if he did.

As for whether he will, it’s just too early to hazard a guess. By year’s end, though, it most likely will be pretty clear if he is or isn’t.

An interesting piece  of paper made its way to the desk of Magnolia Marketplace late yesterday afternoon.

It’s a flier announcing a fundraiser for Haley’s Leadership PAC, a political action committee formed by Gov. Haley Barbour. And this isn’t just any fundraiser. To go with a pile of cash, participants better have nerves of steel.

For a minimum gift of $5,000 you can hop in a stock car and take a few laps around Las Vegas Motor Speedway with Barbour on Sunday, March 7. After that, you can rub elbows at a cocktail party with Barbour and casino and resort mogul Steve Wynn.

Obviously, politicians at every level hold all sorts of fundraisers pretty much all the time. But a minimum gift of $5,000 is enough to make reasonable folks wonder if that kind of heavy financial weight might be targeted toward a national race — you know, like the one whose winner gets to live in the White House.

So we called Dan Turner, Barbour’s press secretary, and asked him.

Nothing’s changed regarding Barbour’s plans for 2012, Turner said a few minutes ago. Barbour is concentrating on the midterm elections this fall, in which Republicans think there’s a decent chance they can take one or both of the chambers of Congress, and the few dozen governor’s races that will go down between now and 2012. That’s been Barbour’s response to every one of the million different ways he’s been asked if he’s running for president.

“That’s all I’ve ever heard him say,” Turner said.

Ladies and gentlemen, start your speculation.

Another Friday, another round of budget cuts.

Exactly two weeks after he cut the fiscal year 2010 budget for the third time, Gov. Haley Barbour cut it again this afternoon.

Today’s trim takes $21 million out of appropriated revenues, bringing the total cuts for FY2010 up to $458.5 million.

January was the 17th consecutive month that revenues had fallen short of projections, and Barbour said this afternoon that today’s cuts were “optimistic,” and that it was almost guaranteed  more would be necessary.

After exemptions, which include debt service, court-ordered settlements and — as of early this week, due to an interpretation of the State Constitution — the Supreme Court, FY2010’s revenue has been reduced by 8.664 percent.

Barbour has come under fire for his handling of the budget, particularly from Democratic leadership in the House of Representatives for his refusal to tap into the state’s rainy day fund.

Barbour said of the three revenue estimation models his office uses in deciding how much to cut, he has used the model that calls for cutting the least amount of money, which has forced him to make additional cuts once monthly revenue collections come up short, like they have for the past year and a half .

“If there’s a criticism, it’s that we’re not cutting enough,” Barbour said.

We just got off the phone with Toyota Motor Manufacturing North America Spokeswoman Barbara McDaniel. Here’s the full transcript of our brief conversation.

Magnolia Marketplace: “Has anything become official with the Prius recall?”

McDaniel: “No, there’s nothing official. We’re still investigating.”

Magnolia Marketplace: “I’m contractually obligated to ask this question, but will this have any effect on the Blue Springs facility?”

McDaniel: “No.”

So there you have it. Gov. Haley Barbour is holding a press conference at 11 a.m. to announce yet another round of budget cuts, but we’ll try to sneak in a question about Toyota and see what he thinks.

UPDATED AT 9:36 A.M.: Barbour’s office has just issued a press release announcing the press conference at 11 has been canceled so Barbour can “continue to analyze budget options.”

Gov. Haley Barbour was the keynote for today’s monthly luncheon meeting of the Stennis Capitol Press Corps in Jackson. Usually, speakers offer a 20- to 30-minute presentation before taking a few questions from the audience.

Barbour took the podium and started taking questions immediately. It was a nice change.

Anyway, Barbour didn’t say a whole lot that he didn’t say Friday, when he announced that he was making the third round of cuts to the state’s budget.

He did say that he thought “the vast majority of school districts will be fine” financially after the the latest round of cuts brought the total dollars shaved from the Mississippi Adequate Education Program to $170 million for fiscal year 2010. State Superintendent of Education Dr. Tom Burnham said Friday afternoon that the cuts would “devastate” the state’s public education system. School districts will have to lean heavily on their reserves, Barbour said, to make it to the end of the budget  year. Included in Barbour’s executive budget recommendation is a $35 million set aside to assist those districts whose reserves are not as deep as others.

Barbour also repeated a line he has used frequently the past couple months, that he thinks Mississippi will emerge from the national recession quicker than other states because of the proliferation of high-tech manufacturing jobs from projects like Severstal in Columbus and the GE Aviation plant in Batesville. His commission to study school consolidation is scheduled to release its findings in a report on April 1, which is too late for that issue to be considered in the regular session. Barbour said it’s likely a special session would be needed to tackle it. That, of course, is assuming lawmakers are able to craft a budget for FY2011 by the end of March, which is far from guaranteed.

Barbour, who serves as chairman of the Republican Governors Association, also talked some national politics. He called Republican Scott Brown’s victory in Massachusetts for the right to fill Ted Kennedy’s old U.S. Senate seat “volcanic” and said it had changed the GOP’s playbook for 2010 and beyond, with candidate recruitment increasing in some places that have traditionally been hostile to Republicans. The RGA, Barbour said, has $25 million to spend on elections in 2010, which is a record amount.

Barbour thinks this political environment is more favorable to Republicans than it was in 1994, when Barbour was head of the National Republican Committee and engineered the GOP takeover of the U.S. House and Senate.

“There’s a lot of energy on our side,” Barbour said.

Barbour also had a pretty interesting take on the U.S. Supreme Court’s decision to strike down a 20-year-old law that prohibited corporations and unions from spending money on political advertising. Magnolia Marketplace is working on a story about that for next week’s MBJ, and Barbour’s thoughts on the matter will pepper it pretty heavily. Look for it.

Magnolia Marketplace has finally gotten over some sort of hybrid flu/weird sickness menace that has kept us out of the office this week.

The first day back has been eventful.

To recap: Gov. Haley Barbour said earlier this week that if the House did not pass the bill sent by the Senate that would extend Barbour’s budget-cutting authority from 5 percent to 10 percent, and allow him flexibility as far as which agencies got cut, that he would cut the fiscal year 2010 budget this week to balance it in the middle of spiraling state revenue. He apparently wasn’t kidding.

Barbour just wrapped a press conference in which he announced he’s ordering that the FY2010 budget be cut an additional 3.1 percent across the board, on top of the 5 percent in cuts he’s made since the budget  year started last July.

So every agency and department has been cut by 8.1 percent, for a total of $437 million. Exempt from those cuts are things like debt service, court-ordered settlement and — Magnolia Marketplace did not know this until today — the Legislature. When lawmakers passed the law that spelled out who was and wasn’t exempt from budget cuts, they included themselves in the “exempt” category.

The big ticket items broke down like this as far as total cuts for FY2010.

Mississippi Adequate Education Program: $170 million

Higher Education: $54 million

Community and Junior Colleges: $20.5

Corrections: $26.5 million

Barbour said Corrections could absorb the cuts without the release of the much-talked-about 3,500 to 4,000 prisoners, but that shifting inmate populations to community work centers and away from the state prisons, and the shifting of some discretionary stimulus money, would be necessary to make that happen.

“But I can’t guarantee that zero will be released, either,” Barbour said.

When asked if the latest cuts would result in state workers losing their jobs, Barbour replied, “Yes.”

Barbour also reiterated his long-held stance that the state’s rainy day fund has to last another couple years and that next two budget  years will feature “enormous losses” in revenue as stimulus money disappears.

As for this year, “I cannot guarantee that this is where the cuts will end,” Barbour said.

UPDATED AT 12:20 P.M. : Speaker Billy McCoy, D-Rienzi, just released a statement regarding today’s budget news. “I’m not a prophet or the son of a prophet, but I predict a great hue and cry will come down on those whom Mississippians feel are responsible for unnecessarily  gutting funds and placing jobs in peril when a better alternative exists,” McCoy said, referencing the House plan that would have spent additional money from the rainy day fund and the governor’s discretionary stimulus fund.”

McCoy compared Barbour’s move today to Sherman’s March to the Sea, in which he torched every city, town and hamlet he came across. “We know how about how long it took to recover from that,” McCoy said.

For the past two months or so, Gov. Haley Barbour has said he needs more budget authority from the Legislature to balance the budget for fiscal year 2010. Because state law does not allow Barbour to cut the state budget more than 5 percent without legislative approval — he wants the authority to cut it 10 percent — and because the FY2010 budget will have to be cut across-the-board by a little more than 8 percent to balance, that means lawmakers will have to work on the current budget before they can turn their full attention to the FY2011 budget.

Barbour’s authority extension, he says, will allow him to balance FY2010’s budget while lawmakers hammer out FY2011’s spending plan. Trouble is, lawmakers would have to agree to such a plan, and as it stands now, that looks unlikely.

Those first two paragraphs are meant to say this: Unless there is a change in the political winds, there is almost no chance a budget for FY2011 gets done by the end of March. Balancing FY2010’s budget would, at a minimum, take a couple weeks, which would force negotiations for FY2011 to start later than usual, which would almost certainly force lawmakers to extend the session, just like last year when a budget agreement was reached only a few hours before the fiscal  year started.

House and Senate leadership were confident before the session started that there would be a budget agreement by the end of March. They’re right, but it will be an agreement for the fiscal year that started last July, not the one that starts this July.

So get ready for a long, long session.

UPDATED AT 2:49 P.M. : Magnolia Marketplace just had about a two-minute conversation with Lt. Gov. Phil Bryant about the possibility of lawmakers having to work past the regular adjournment date to get a budget passed for FY2011. He said it’s a near certainty the Senate will send a bill to the House that would give Barbour the authority to cut the budget by 10 percent. And if the House doesn’t pass it?

“I think we’ll be here until June if that happens,” Bryant said.

Gov. Haley Barbour just wrapped a two-hour roundtable with about 30 members of the state’s business community. There bankers, business owners, trade group and association executives and two or three legislators. Barbour had called them all into his Capitol office to get their ideas on how to spur economic development and job creation.

The majority of the time, Barbour said a lot of the things he said earlier today at the MEC’s A Capital Day: no new taxes, job creation is his most important function as the state’s chief executive, state revenue is not recovering anytime soon, and the budget process this session isn’t going to be easy, which is why the lawmakers should grant him the authority to cut the budget by 10 percent instead of only 5 percent without their approval.

What was new was Barbour mentioning the possibility of the state guaranteeing portions (maybe 25 percent) of some small business loans — loans that banks would have made two years ago, but now are stuck because of the credit markets. The state guaranteeing maybe a fourth of the loan’s total might be enough for a bank to go ahead and approve it. Such a plan would be designed to make it easier for small businesses to borrow money. Barbour got mixed reactions from some of the financial folks in the crowd.

Barbour stressed that this proposal was in the very early stages, but did say that he expected an up or down vote on it before the legislative session concludes in late March (or April, May or June). He also said he was “not looking for another beef plant” and that the risk to taxpayers’ money had to be weighed carefully, and duplication of existing U.S. Small Business Administration programs had to be avoided.

This will certainly be something to watch as the session moves forward. I’ll be anxious to see how some key lawmakers receive this news. For now, though, the temperature is dropping and there’s rain on the streets. Time to head home. See you tomorrow.