Thursday, September 30, 2010
Budget woes trickle down
By SUE WATSON
With state legislative budget committee meetings ongoing, county supervisors have expressed a nagging worry that 2012 may be the year of the big budget crunch for county governments.
Gary Anderson, consultant to the Marshall County Board of Supervisors, advised the board to keep their eyes open to what goes on in state budget hearings this fall.
The shortfalls in sales tax revenues and other revenues caused Gov. Haley Barbour to have to balance the budget with $500 million out of the state revenue budget of $5 billion for year 2009-10. Supervisors worry that those cuts, if continued, will eventually have trickle-down effects on local governments, particularly in year 2012, they said.
The legislative budget committee has work to do to find nearly $650 million to plug revenue shortfalls expected in 2012, Anderson said.
That concern arises because reserves in the Rainy Day Fund and the Tobacco Trust Fund are dwindling, he said. And federal stimulus dollars of about $250 million earmarked for education in 2011 may be held until 2012 when they may be more direly needed, Anderson said.
There is about $177 million left in the Rainy Day Fund and about $150 million in the Tobacco Trust Fund, two pools of money that are rapidly drying up, he said.
When Anderson was working as state fiscal officer and executive director of the Department of Finance Administration seven years ago, there was $850 million in the tobacco fund, but legislative action to divert annual payments to the fund from tobacco companies, and withdrawals from the corpus of the fund to plug holes in the state budget, have caused the fund to dwindle, he said.
Anderson said lawyers working with the governor’s office and state Legislature are looking to see if any of the stimulus money for education that arrived in the summer this year can be held until the 2012 budget year when it will be more direly needed.
“It’s all a juggling act,” he told supervisors.
He said legislators were looking at the tax code for possible revenues (increases) and that supervisors and the Mississippi Supervisors Association should “watch the tax code.”
Supervisor George Zinn III asked what the likelihood is that the governor will hold to his mantra – “no new taxes.”
“Going into the summer, I was of the opinion nobody wants to raise taxes in an election year,” Anderson said. “However, there are lots of meetings taking place. I am hearing it will be a multiple thing. Everybody will bear some of the pain. That’s what I hear from the House and Senate.
“It may not happen, but we have to make sure we’re keeping our eyes on the ball on this one.”
The second congressional stimulus passed in July 2010 is supposed to be spent in the 2011 federal fiscal year which begins January 1, 2011, and runs to December 31, 2011, Anderson said. Language in that federal legislation says states cannot place those stimulus dollars in reserve for fiscal year 2012, he said.
Budget tightening at the state level could mean a tax increase at the local level because of unfunded mandatory legislation handed down to local governments.
State agencies are looking ahead to next year when stimulus dollars end and other one-time use monies won’t be around, he said.
“So they see the budget hole being significant next year,” he said. “The Mississippi Association of Supervisors needs not to go to sleep.”
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