Barbour, lawmakers adopt $5.1 billion revenue estimate for FY09

Published 5:19 pm Wednesday, November 14, 2007

The economic growth fueled by Hurricane Katrina is abating in Mississippi, and in the face of moderate tax collections Gov. Haley Barbour and lawmakers say state spending will be lean next fiscal year.

Members of the Joint Legislative Budget Committee and Barbour met Tuesday to adopt a state revenue estimate, the basis of budget spending for the fiscal year that begins July 1.

The adopted revenue estimate of nearly $5.1 billion is only a 2.9 percent increase, or $143 million, more than the current year’s estimate.

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Barbour and the committee also revised the current year’s budget estimate, increasing it by $11.8 million.

Lawmakers will work within the $5.1 billion estimate to allocate tax dollars to various agencies during the legislative session that convenes in January.

The budget committee and Barbour will release their separate spending recommendations later.

“This budget will mean a spartan appropriation season,” said Barbour, who last week won a second term in office. “It will mean some real belt-tightening. The numbers are a lot lower than a lot of people were hoping for.”

Senate Appropriations Chairman Jack Gordon, D-Okolona, said agencies presented lawmakers with about $500 million in wish-list spending requests during budget hearings in September.

Gordon said the state will only have about $200 million to address those needs, and that’s if there’s some maneuvering involved, such as delaying the $38 million repayment to the state’s tobacco trust fund. The fund is often tapped to fill budget holes.

Gordon said lawmakers will be able to fully fund the Mississippi Adequate Education Program, a complicated formula to ensure equitable funding for the state’s school districts.

He said pay raises for educators or state employees probably won’t happen.

“We’re going to have be very strict in our priorities. Some of the things we have been doing, we’re not going to be able to do,” Gordon said.

The 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 bases its recommendations on employment figures, tax collections and other financial trends.

State Economist Phil Pepper said the state’s economy has performed well in 2007, but now it’s “in a vulnerable position.”

He said much of the state growth has been a result of Hurricane Katrina, which struck the Gulf Coast in August 2005. The storm devastated the region and set off a massive rebuilding effort.

That’s changing now, though. Pepper said the value of building permits declined in Mississippi each month between January and August.

He said the sub-prime mortgage industry crisis, the anticipated slow growth nationally and the declining value of the dollar also are factors in Mississippi’s economy.