Wednesday, March 17, 2010
With newly revised revenue estimates projecting a slow recovery for the state economy, Gov. Haley Barbour is preparing to cut an additional $41 million from the state budget for this fiscal year. The Mississippi Legislature's joint budget committee today adopted revised revenue estimates predicting a 6.3 percent drop in state revenue for the 2010 fiscal year and a 0.4 increase in 2011. Barbour told reporters that he thought the minimal growth predicted in 2011 was over-optimistic.
"At best, we've touched bottom. I don't see the real economy, on Main Street--whether it's in Tupelo, Wiggins or Vicksburg--I don't see real growth," Barbour said. "I do feel like maybe we've found the bottom and maybe things aren't getting worse. But the expectation that things are going to be better requires us to be prudent and cautious."
The new estimates anticipate $4.432 billion in total revenue for the current fiscal year, $466.5 million below the original figure used for 2010 appropriations. In 2011, state economists predict revenues of $4.45 billion. The estimates, which come from the state's Revenue Estimating Group, are based on national and state economic data. Lawmakers will use the revised estimates in ongoing budget negotiations over 2011 appropriations bills.
"Even though the (national) economy is picking up gradually, we have to recognize that we've been behind eight months here," state economist Phil Pepper said. "The revenues are not tracking the (national) economy. Part of what's going on is we're seeing loans go down in Mississippi, or no increase in loans. We see deposits going up. Consumers have real concerns, so they're not spending the money."
Some members of the joint budget committee questioned the estimates' accuracy, noting that state revenues have consistently fallen below expectations for the last two years. Rep. George Flaggs, D-Jackson, argued that estimates made closer to June 30 the end of the 2010 fiscal year, would better predict 2011 revenues.
"I think this meeting should be at the latter part of March. I'm cautiously optimistic that the revenue is going to pick up." Flaggs said "It may be politically expedient to lower the estimate now."
Flaggs and Rep. Steve Holland, D-Plantersville, were the only committee members to vote against adopting the revised revenue estimates.
Republican Senators on the panel expressed concerns that the revenue estimates were too high. Senate Appropriations Committee Chairman Alan Nunnelee, R-Tupelo, proposed a lower 2011 revenue estimate of $4.32 billion, but the proposal died for lack of House support.
Barbour said that he also harbored doubts about the revenue estimate.
"I do think the revenue estimate is high," Barbour said. "For the first four and a half years I was governor, (state economists) were underestimating. Every month we collected more than had been predicted, each fiscal year, more than had been predicted. That changed in September of 2008, and now for 18 consecutive months, revenue has been less than the estimate. I think it highly unlikely that we'll turn around and get into positive ground."