Taxpayers: Welcome to the edge of the budget cliff

Published 2:26 pm Friday, October 29, 2010

For the last three budget years, Gov. Haley Barbour and the legislative leadership have jointly warned of the approach of the edge of what Barbour has come to call the “budget cliff.”

Welcome to the edge, taxpayers.

In talking about the relative good news of slightly increased revenue collections during the first quarter of Fiscal Year 2011, Barbour noted that “nothing changes the fact that we face a massive budgetary cliff in FY 2012 when several hundreds of millions of federal stimulus dollars go away.”

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Overall state tax collections in August were more than $12.4 million, or 3.9 percent, ahead of projections. For the first two months of the fiscal year — July and August — collections were $19.1 million ahead, or 3.6 percent. September revenue was $5.2 million below expectations.

In light of that, Barbour sent a letter to agency heads recently asking for ideas on how to cut their budgets next year by 15 percent. Barbour said “initial estimates project a 10 to 15 percent reduction for agencies below FY 2011 levels.”

Lawmakers will face the prospect of crafting next year’s budget with a budget gap of as much as $400 million due to the loss of federal stimulus dollars. State Rep. Cecil Brown, D-Jackson, said recently that budgets had been cut 12 percent for fiscal year 2011 and could be cut another 10 to 12 percent for fiscal year 2012.

The hard truth is that budget makers have propped up the budget over the last decade with federal Hurricane Katrina relief funding, federal stimulus funding, raids on the state’s “rainy day fund” and raids on the state’s tobacco settlement trust fund. …

Federal dollars are drying up. The stimulus funds are nearly exhausted. The “rainy day” fund and tobacco monies are likewise becoming limited as lawmakers spend them down. Fiscal year 2012 is likely to be the most difficult budget year since 1932. Why? The state is running out of special fund piggy banks to raid and the federal funds spigot has been turned off. …

The fact that some legislators are looking at asking voters if they want to raise “sin” taxes for new revenue should surprise no one. They are standing on the edge looking off the budget cliff and it is a long way down.