Bad News and Hard Cuts Embody State of State


Mississippi Gov. Haley Barbour's 2010 State of the State address on Monday fell short on good news. The state is facing a revenue shortfall of more than $350 million, and Barbour has recommended cutting 10 percent of the state's budget in nearly every agency, save the Department of Corrections.

Early in his speech, Barbour championed the arrival of Schulz GMBH, to Tunica County. He said the German company is slated to employ 500 people to manufacture steel pipes. But most of the state's job gains referenced in the speech arrived through $530 billion from the U.S. Department of Defense. Barbour announced an expansion to military-grade weapons manufacturer ATK in Tishomingo County that will create up to 600 new jobs, according to the Tishomingo County Development Foundation, and Barbour thanked legislators for reauthorizing the Workforce Enhancement Training (WET) Fund, which he said allowed American Eurocopter, in Columbus, to create new 64 jobs and take on a bigger helicopter production contract with the military.

Barbour then touted the promises of a new coal plant in Kemper County, a plant facing strong opposition from Mississippi Power customers who fear high rate increases will be necessary to fund the $1 billion plant. Kemper residents are unwilling to sell the mineral rights to the lignite the plant will be burning for 50-cents a ton. He mentioned Rentech's proposed $3 billion coal-to-liquid fuel plant in Natchez and Mississippi Gasification Inc.'s selection by the U.S. Department of Energy for a $1.7 billion loan to build a synthetic natural gas plant at Moss Point.

He also praised expansions at the General Electric plant in Batesville and a $510 million expansion at Entergy's Grand Gulf One nuclear unit, despite critics testifying before the Public Service Commission that the state's electricity needs for the next 20 years is negligible.

The governor blasted the idea of revenue increases to cover the dismal budget shortfall, and said he would not support the idea of a "tax amnesty" to encourage delinquent payments of state taxes, saying the endeavor would persuade people to procrastinate on their next payment in expectation of a subsequent amnesty.

Barbour emphasized that shortfalls were dragging this year's budget process down and appealed to legislators for the power to cut the state budget up to 10 percent.

"We have more budget cuts to make in this fiscal year, and I have asked that the Legislature to change the law to allow the governor the flexibility to cut departments and agencies up to 10 percent. Without that flexibility, the cuts that would be required for the Corrections budget would force the state to release 3,400 to 4,000 convicts who are not approved for parole," Barbour said.

The governor aims his appeal specifically at the Democratic-controlled House, for the Senate has already approved the effort with the passage of Senate Bill 2495. The majority-Democratic House fears the governor's new power, despite a sunset clause slated for 2011 in S.B. 2495, with many legislators saying the state can balance the budget without Barbour's steep cuts to state agencies.

Nancy Loome, executive director of education lobbying group The Parents' Campaign, asked House members to oppose granting the governor the power to whack the budget. She said she feared the most unfortunate target of the financial evisceration would be education, and that refusing the governor that power would herald a year of slightly more moderate cuts.

"Barbour provided the Legislature his plan for additional budget cuts were he to be given the additional authority he has requested," Loome wrote in a Jan. 18 press statement. "That plan calls for total cuts to K-12 education of 8.9 percent. In his State of the State address, Barbour stated that, if he was not given additional authority, and if he-not the Legislature-were to make additional cuts, all state agencies would be cut 8.1 percent (a smaller cut than education would face under his preferred scenario)."

Loome also pointed out that State Economist Dr. Phil Pepper and the State Revenue Estimating Committee predicted a budget shortfall this year of $347 million, but the governor would cut $65 million beyond that shortfall-a total of $412 million, to the detriment of education.

The Parents' Campaign also urged legislators to take more out of the state's $500 million Rainy Day Fund to cover the shortfall, a move vehemently opposed by the governor, who predicts the fund will not last a projected three more years at that rate of depletion. Mississippi Democratic Party Chairman Jamie Franks said the state could not hope to prosper if it devastated its education and social services programs.

"If we cut public education to the bone, if we decimate our health care systems and if we destroy the programs that help those who can't help themselves, then we will have failed the people of Mississippi.

Franks pointed out that legislators and the governor had a choice of "punishing" school children by cutting public education, "locking up the sick" by cutting mental health and "taking the easy way out" by slashing government services, or spending wisely from the Rainy Day fund and raising state revenues to match the state's cost structure.

Read the full text of Barbour's speech and the Democratic response.


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