May 28, 2005

Statement of Governor Haley Barbour Concerning the
Passage of the FY 06 State Budget

“The Senate and House are poised to pass an FY 06 budget. I congratulate everyone involved in both houses and thank them for their hard work.

While the agreed upon budget differs in many ways from what I proposed, it is a budget I can sign. In fact, it is a better budget than the State has had in a number of years, well back into the Fordice Administration. We have almost climbed out of the terrible budget hole that was dug in recent years. Not quite, but almost.

Raids on special funds are almost eliminated (down from $120 million to $20 million), and last year’s plan to step down spending from the Health Care Expendable Fund is followed exactly.

Crucial to the major reduction in use of one-time money and raids on special funds is the growth of state revenue collections. Revenue collections, which went up only 2% two years ago and 4.05% last year, are increasing well above 6% this year. Next year’s revenue estimate is very conservative, with a projection of only 3.7% growth.

Of course, this budget does not include any tax increases. The taxpayers are already doing their part.

Total state spending next year will actually be 1.6% lower than what is being spent this year (FY 05). Next year’s budget is $4.623 billion compared with actual FY 05 spending of $4.7 billion.

These savings by many other departments and agencies allow funding for K-12 education to increase by 7.2%, or $143 million, including full funding of the promised 8% teacher pay raise (including health insurance and retirement) and full merit pay for all National Board Certified teachers. I regret the Legislature did not take my recommendation to earmark funds for high-growth school districts. While funding is well below the approximately 15% increase requested, K-12 funding for next year is more than adequate.

Higher education overall will receive a tiny increase, but general support for our universities will be reduced about 2%. Community and junior colleges general support are level funded. Workforce development at the community colleges will receive a substantial increase, and the Ayers Settlement is fully funded.

The 2% reduction is something the universities can manage, but it is obvious higher education must be a top priority for increased funding in the next budget. Our universities will be receiving nearly 10% less in state support next year than they received six years previously. We must correct that.

Law enforcement, homeland security and the National Guard are essentially level funded, plus $3 million is being provided for a new Highway Patrol Troopers School, which is overdue and critical to public safety.

In an effort to streamline state government, many departments and agencies will receive less funding next year. The Governor’s Office budget will be 5% less, for instance.

The only significant problem with this budget is that it underfunds debt service. While the exact amount needed to pay debt service is hard to project (our estimate for this year was about $20 million more than was actually spent), the figure appropriated for FY 06 is clearly less than will be needed. This problem is sufficiently mitigated by the Legislature’s giving the State Treasurer the authority to take whatever funds necessary from state accounts to pay interest and debt service in a timely fashion. Further, I believe the amount of revenue available for FY 06 will actually be higher than the estimate being used for the budget, and that also mitigates any effects from this underfunding.

Finally, you may notice the funding appropriated for Medicaid is $493 million, which is $20 million less than the estimated need for the program of $513 million. This is because we are confident the Division of Medicaid will win its suit to stop $20 million a year of the State’s tobacco settlement money from being diverted to a private charity, so that money can go to Medicaid. That $20 million would provide health care for 50,000 children on Medicaid for a full year.

Again the citizens of Mississippi will have the best state budget in years, and we will keep working to streamline government and control costs rather than raising taxes.”
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Governor Haley Barbour
P.O. Box 139 Jackson, MS 39205
Phone: 601.359.3150 Fax: 601.359.3741
         

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