By EMILY W. PETTUS
JACKSON — Mississippi lawmakers say they intend to follow their own “98 percent rule” this session as they write a $5.6 billion state budget.
That shouldn’t sound like a big deal, but given their actions of the past few years, it is.
A law enacted in the early 1990s says only 98 percent of anticipated revenue should be included in any budget. Part of the remaining 2 percent is supposed to go into cash reserves, and part is supposed to carry forward into the following year’s budget — a head start on funding for the future.
In plain English, anticipated revenue is the amount of money the state expects to collect in taxes and fees.
During the rocky economic times the past four years, legislators have given themselves permission to waive the 98 percent rule, which led to budgets that spent 100 percent of anticipated revenues, and then some.
With bipartisan support, they padded out the budgets by pulling tens of millions of dollars from the state’s many reserve accounts, including a health care trust fund that was established in the late 1990s with winnings from a lawsuit against tobacco companies. Legislators who started the health care trust fund envisioned it growing into a massive savings account in which millions of dollars of annual payments would be deposited. Only the earnings from the account were supposed to be spent.
Lawmakers waived the 98 percent rule and nearly depleted the health care trust fund in recent years with the blessing of Republican Gov. Haley Barbour, who left office when his second term expired in January.
Before winning the governorship in 2003, Barbour was an A-list Washington lobbyist whose clients included tobacco companies. As such, he fought the lawsuits Mississippi and most other states filed to recover costs of treating sick smokers. It was no small irony, then, Mississippi’s winnings helped Barbour mitigate budget cuts when he was governor.
Barbour frequently criticized the fiscal practices of the Democratic governor he unseated, Ronnie Musgrove. Barbour claimed he had inherited roughly a $700 million budget hole, partly because Musgrove approved legislators’ use of revenue that would be available only a single year at a time rather than on a continuing basis. The practice didn’t disappear under Barbour. Legislators said last week that the current year’s budget, the last one Barbour signed, includes nearly $432.5 million in “one-time money.”
Budget writing isn’t a precise science, but Mississippi has several experts who analyze economic trends and make their best guess about how much money the state might collect.
“The committee is always going to be wrong because it’s impossible to predict revenue 18 months out,” said Republican Lt. Gov. Tate Reeves, who served on the revenue estimating committee the past eight years as state treasurer. “That’s why it’s so important to have the 2 percent set-aside, to protect us against any unknown economic downturns that we’re not aware of.”
Mississippi’s fiscal 2013 year begins July 1. The House and Senate have drafted separate budget proposals, and they face a late-April deadline to negotiate spending for everything from K-12 schools (the biggest single part of the budget) to a beaver control program ($700,000 in the current year and the same amount proposed for the coming year).
Members of the Joint Legislative Budget Committee, including Democratic Rep. George Flaggs of Vicksburg, are seeking the trust of rank-and-file lawmakers as the budget process enters its final weeks. During a House debate last week, Flaggs told colleagues they could take his word that he’d seek more education funding.
Flaggs said: “If I tell you the cheese is on the mountain, bring the crackers.”