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Miss. budget predicted to take healthy jump in coming year

Mississippi’s long, expensive recovery from Hurricane Katrina is still fueling higher-than-expected state tax collections, but there are only so many new roofs and new refrigerators still to be bought.

So, officials are taking an “optimistic but cautious approach” as they start mapping out a state budget for the coming year, says House Speaker Billy McCoy, D-Rienzi

McCoy and other members of the Joint Legislative Budget Committee met with Gov. Haley Barbour on Tuesday. Together, they took two steps:

— They increased the estimate for the current year’s budget from nearly $4.5 billion to nearly $4.7 billion. That makes an additional $192.7 million available for state programs between now and June 30. The change was made because tax collections have been significantly higher than expected over the past four months.

— Then, Barbour and the legislative committee set a budget estimate of just over $4.9 billion for the fiscal year that starts next July 1.

Using both sets of revised figures, officials said there will be 5.3 percent more money to spend next year on schools, prisons and other state services.

Lawmakers will work within the $4.9 billion estimate to divvy up tax dollars during the three-month session that starts in January — a session that leads into the November 2007 elections, when all legislative seats and statewide offices will be filled.

“It should be a pretty good year for the citizens of Mississippi in the way of shoring up some of the cuts of the last … three years,” said Rep. Steve Holland, D-Plantersville, who’s on the 14-member Legislative Budget Committee.

Holland said education, health care and public safety will be priorities for budget writers in the House. Lt. Gov. Amy Tuck, who presides over the Senate and is on the Budget Committee, listed similar priorities.

“I think we should all be very encouraged that we see that we are exceeding the (tax collection) estimates that we anticipated,” Tuck said.

The changes in this year’s and next year’s revenue estimates were based on recommendations from five experts — the state economist, the state treasurer, the state fiscal officer, the director of the Legislative Budget Office and the director of the state Tax Commission.

The group studies employment figures, tax collections and other financial trends before making its recommendations.

“The growth that we’re seeing is driven almost exclusively by Katrina,” said state economist Phil Pepper. “The fundamental weakness we have in the state is the limited work force.”

Pepper has frequently told lawmakers that Mississippi’s work force has relatively low levels of education compared to other states, and because of that the state could have trouble competing in the international economy.

Barbour said he appreciates that the revenue estimating group was cautious in its recommendations “and recognized that the explosive growth that’s been going on is not likely to continue.”

The governor will release his budget recommendations by Nov. 15. He said he’ll present a balanced budget that spends only 98 percent of projected revenues, with 2 percent set aside into a rainy day fund as required by law. During tight budget times the past several years, officials have spent 100 percent of revenues.

The governor said his budget also will include a 3 percent pay raise for teachers and “phase-in” funding for the Mississippi Adequate Education Program. MAEP is a complicated formula designed to ensure that every school district has enough money to meet midlevel accreditation standards. It was put into law in 1997 and phased in over several years. It has been fully funded only once — during the election-year legislative session in 2003.

Barbour said his proposal would not fully fund all of MAEP, but it would fully fund the portion of the formula that’s designed to help high-growth school districts.

Barbour also said his budget will not have a tax increase.

A battle is already shaping up because several legislative leaders, including Tuck, say they’ll push to increase the cigarette tax and reduce the grocery tax. At 18 cents a pack, Mississippi has the third-lowest cigarette tax rate in the nation. At 7 percent, the state has one of the highest grocery tax rates.