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Barbour cuts additional $54 million from budget

December 3rd, 2009 No comments

To the surprise of nobody, the major announcement Gov. Haley Barbour had for the FY2010 budget this afternoon was that he was reducing it by $54 million.

This is the second time Barbour has had to trim spending since the fiscal year started July 1. In September, he slashed $172 million, mostly on education. Today’s announcement brings the total amount of cuts for FY2010 to $224 million.

Today’s action hit agencies that already had built-in cuts from FY2009 to FY2010. Those agencies were exempt from the September cuts. State law does not allow Barbour to cut any agency more than 5 percent until every agency has been cut at least 5 percent, so the agencies that escaped in September fell under the axe today.

They include the Division of Medicaid, which Barbour cut by 5 percent, or $19.2 million. The Department of Corrections, which was held harmless in September, was cut 1 percent ($3.2 million). Aside from corrections, debt service and court-ordered portions of the Department of Rehabilatation Services, the Department of Human Services and the Ayers settlement, the state’s higher education budget is the only agency that hasn’t been cut by 5 percent, but it’s close, at 4.7 percent.

Barbour was quick to warn this would not be the last time he has to adjust the budget. Because the total deficit for FY2010, according to revenue estimate the Joint Legislative Budget Committee adopted in November, is expected to reach $386 million, an additional $160 million in cuts will be necessary before the fiscal year ends June 30.

“It is clear that state revenue will not recover by the end of this fiscal year,” he said.

Mississippi’s revenue has fallen short of estimates for 15 consecutive months. In November, collections were 6.88 percent, or $24.8 million, under projections. For the first five months of the fiscal year, they are 7.3 percent, or $136.8 million, short.

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Barbour sharpening his axe

December 3rd, 2009 No comments

Gov. Haley Barbour will hold a news conference this afternoon to, according to a press release from his office, announce “major decisions” regarding the state’s budget.

That’s pretty easy to translate. “Major decision” means “more cuts” to the state’s budget that has already had $172 million trimmed from it in September.

November’s revenue came in 6.88 percent, or about $24.8 million, under estimates. For the fiscal  year that started almost exactly five months ago, revenue is $136.6 million shy of where revenue experts thought it would be. If that pace holds until next June 30, the nearly $330 million deficit will be right in line with what Barbour said he thought it would be when he made the first round of cuts in September.

Barbour will share the particulars at 2 p.m. Magnolia Marketplace will have the details shortly thereafter.

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Revenue down — again — in November

December 1st, 2009 No comments

For the 15th straight month, Mississippi’s tax revenue collections have been less than what estimates said they would be.

Numbers released today by the Mississippi State Tax Commission show that November’s revenue is 6.88 percent, or $24.8 million, below projections. For the first five months of FY2010, which started July 1, revenue is $136.6 million short of where the state’s financial experts thought it would be. That’s a 7.38 percent shortfall. If that pace holds, the total deficit for FY2010 will come in a shade under $330 million.

Gov. Haley Barbour has already cut $172 million out of this year’s budget. More cuts are a guarantee. In a statement released this afternoon, Barbour called them “unavoidable” and reiterated that the budget for FY2011 will look nothing like budgets of fiscal years past.

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Opinions emerge on consolidation, university mergers

November 16th, 2009 No comments

Gov. Haley Barbour unveiled his budget recommendation this afternoon.

As expected, Barbour’s proposal calls for a major restructuring of the state’s education system.

The state’s public school districts should be reduced from 152 to 100, Barbour said, in an effort to save money as state revenue continues to plunge.

The reforms reach into higher education, too. Barbour’s budget plan proposes that the Mississippi University for Women merge with Mississippi State University, and for Alcorn State University and Mississippi Valley State University to merge with Jackson State. In each instance, the campuses of the schools eliminated would remain open, but carry a new name.

The proposals come on the heels of the Joint Legislative Budget Committee’s meeting last week, in which lawmakers learned revenue in fiscal year 2011, which starts next July 1, would come in $715 million under appropriations for FY10. The predicted shortfall for FY12 is over $1 billion.

“These are major changes for a significant new direction,” Barbour said.

School district consolidation and university mergers have historically been dead on arrival when the ideas reached the Capitol. Rep. Kelvin Buck, D-Holly Springs and chair of the House Universities and Colleges Committee, said in a statement that merging universities is not the solution to the state’s revenue problems.

“I would disagree with the governor or anyone who would suggest that closing universities or reducing access and opportunity to a variety of educational course options is the way to go,” he said. “While this may appear to some to be the answer, it is my view that this method would serve as only a short term approach and would do considerable damage to the state’s future long term economic viability.”

Rep. George Flaggs, D-Vicksburg, was the first to publicly broach the idea combining educational entities last month at the Mississippi Economic Council’s Hobnob.

“The governor has presented a very bold budget that has a lot of merit and one that is a work in progress,” Flaggs said this afternoon. Flaggs serves on the JLBC, which will present its own budget recommendation Dec. 2. Flaggs said he would visit, over the next month, the president of each university affected in Barbour’s plan before making a decision on whether he would support it.

“I’m open for discussion. We’re at a crossroads. We’ve got to make these tough decisions.”

Barbour speaks from across the world

November 10th, 2009 No comments

Gov. Haley Barbour just finished a conference call with reporters, but the big news is where he was sitting while he was speaking: Baghdad.

Barbour was in Iraq visiting soldiers in the Mississippi National Guard’s 155th Armored Brigade as part of a Veterans Day excursion. He couldn’t divulge many details of his trip, per Defense Department Policy.

Anyway, Barbour’s executive budget recommendation is due to the Joint Legislative Budget Committee Monday, the particulars of which dominated much of the 25-minute chat.

Barbour said last week that an additional $200 million in cuts would be necessary to FY10’s budget because of declining tax revenue. Barbour trimmed $172 million — mostly from education — from the budget in September.

“This budget recommendation will be anything but business as usual,” said Barbour, reciting a line he has used often when describing the state’s fiscal situation. “It will include some dramatic ways to restructure (state agencies and government) but it will not be Draconian. We’re not gutting anything. We are going to push very hard to be sure we’re spending on our priorities.”

Barbour did not provide any specifics, but did offer that some of the things he will propose will not save a huge amount of money until FY12, which starts July 1, 2011.

The state’s revenue estimating group told members of the JLBC last week that FY10’s total shortfall will reach $370 million, which is about $20 million more than Barbour’s high-end estimate he made in announcing the September cuts.

Barbour predicted, based on information from the revenue estimating group, that FY11’s total shortfall could exceed $700 million, which is why his budget recommendation due Monday will be a financial shell of those he’s presented in the past, he said. Contributing mightily to that deficit is the state’s Medicaid program, which will lose $200 million starting Jan. 1, 2011, in a combination of decreased federal match money and increased costs. Several hundred million dollars’ worth of stimulus money will also be gone by then.

“We may have to find another $500 million to $600 million in 2012 over and above what we have to find for this year and for FY11,” Barbour said. “We’re going to have to make more big savings (in FY12) even if revenue keeps dropping,” Barbour said.

On a lighter note, Barbour spoke at length about some of the soldiers he’s rubbed elbows with since he arrived in Iraq earlier this week after visiting with wounded Mississippi soldiers at Walter Reed Army Hospital Monday in Washington.

“This warrior mentality that they have is so strong and when one compares it to the liberal media elite or some people in Washington, it has a very powerful effect on me to see these very brave, very strong, very good people,” he said.

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October revenue numbers well below estimates

November 2nd, 2009 No comments

It’s appropriate that Halloween was two days ago, because the state’s revenue collections for October that were released just a few minutes ago are frightening.

Per Kathy Waterbury of the Mississippi State Tax Commission:

• The MSTC collected $390 million in October, which is $27.8 million below the estimate made just before the Legislature adjourned the 2009 session in late June. Advancing the Halloween theme, that represents a shortfall of 6.66 percent.

• For the first four months of fiscal  year 2010, revenue is 7.42 percent short of estimates, for a total shortfall of $105.2 million. Spread out over the entire fiscal year, that would put the state short about $315 million by the time FY11 start next July 1. That number is right in the middle of Gov. Haley Barbour’s $275 million to $350 million estimate he made when he announced budget cuts in September.

As has been the case in prior months, sales tax revenue and individual income tax revenue led the downward spiral, Waterbury said.

Magnolia Marketplace will be at the monthly meeting of the Stennis Capitol Press Corps at lunch today. Ole Miss Chancellor Dr. Dan Jones is the speaker. It will be interesting to see what he says about his institution’s budget situation as it relates to today’s revenue news. We’ll have the details as soon as they’re available.