Miss. governor: Struggling economy squeezes budget

Published 12:46 am Sunday, November 9, 2008

Mississippians should expect an extended recession that could continue to shrink state revenues and reduce the money available for public services, Gov. Haley Barbour said Friday.

“I think we should prepare as a state for a national economy that’s going to be similar to 1978 through 1982, when we were in and out of recessions for about four years and where growth was decreasing for more than a year prior to that,” Barbour said. “That’s one reason that we need to be so careful about the budget.”

Barbour told state agency directors several weeks ago that they should find ways to reduce their spending by 2 percent in the current fiscal year, which started July 1 and ends next June 30.

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He said Friday that state tax collections fell short of expectations for the first four months of the year, and he might have to start cutting budgets soon.

The current general fund — the largest part of the state budget — is about $5.5 billion. This is where Barbour will have to make cuts.

The governor said he does not want to deplete the rainy day fund, which provides a cushion for the state budget. The fund has a balance of about $365 million.

On Nov. 17, Barbour will release his spending recommendations for the budget year that begins next July. Legislators will set the budget next spring. Barbour told a business group last week that no part of the budget will be immune from spending reductions, including education.

Sen. Hob Bryan, D-Amory, said this week he believes “a clear majority of legislators in both houses” would oppose any effort to cut the Mississippi Adequate Education Program, the complex budget formula for elementary and secondary schools.

“I don’t think that’s going to stand,” Bryan said. “I don’t think the Legislature is going to allow it.”

MAEP, enacted in 1997, is designed to ensure each school district has enough money to meet midlevel accreditation standards.

Barbour, a Republican, is in his fifth year as governor and this will be the first year he’ll be forced to make budget cuts. State law requires the governor to make cuts when revenues fall short of expectations several months in a row.

Barbour has frequently criticized the way his Democratic predecessor, Ronnie Musgrove, handled the state budget.

Musgrove was forced to make cuts after an economic downturn in 2001. One year, Musgrove vetoed all budget bills because he said legislators were spending too much money. The House and Senate overrode those vetoes.

Later, Musgrove and lawmakers agreed on budgets that paid for recurring expenses with money that was only available one year at a time. They also took money from the rainy day fund to avoid raising taxes.