Governor Haley Barbour’s
Executive Budget Recommendation Remarks for FY 2007
Tuesday, November 15, 2005
Governor’s Capitol Office

Today I’ve submitted my balanced Executive Budget Recommendation for FY 2007 to the Legislature, as provided by State law.

My budget reflects the state’s financial uncertainties in the wake of Katrina:
1. Uncertainty as to the amount of revenue the state will collect in this and the following fiscal year;
2. Uncertainty as to the amount of federal funds the state will receive and for what purposes those funds will be made available;
3. Uncertainty as to the amount of state funds that will need to be spent both this year and next.

Because of these uncertainties I anticipate that neither this budget not the budget adopted by the Joint Legislative Budget Committee later this year will be the budget adopted by the Legislature in the 2006 Session for FY 2007. I have urged the Joint Legislative Budget Committee to wait until revenue collections through February, 2006, are in hand and can be analyzed before considering the FY 07 budget. I consider that not only prudent but necessary.

Nevertheless, I take my responsibility to present an Executive Budget Recommendation seriously, and this budget is a common sense approach to the uncertainties faced by the State.

My budget essentially funds state government agencies next year at the same levels as the budget for this fiscal year. The only significant exceptions are debt service and Corrections, both of which were under-funded in the current budget. I should note that even with the small increase, the Department of Corrections would be spending less money next year than it spent in FY 04.

My budget does not raise taxes. Raising taxes on people who are tying to recover and rebuild their homes, their businesses and their lives would be wrong. It would make it harder for them to succeed and for Mississippi’s economy to revive.

My budget would give department and agency heads the tools necessary to give taxpayers the biggest bang for their buck of state spending. It would achieve this through lump sum budgets and by eliminating language that prevents maximum effectiveness of employees and organizations. Restrictive language included in FY 06 appropriations bill severely hampers agency directors’ ability to effectively manage their agencies and to get the best job done for the taxpayers.

My budget uses no raids on special funds to pay for general fund expenses as has been done for the last several years.

This budget follows the legislatively established schedule of expenditures from the Health Care Expendable Fund, which was adopted in 2004.

This budget funds general fund agencies from the General Fund, the Budget Contingency Fund, the Health Care Expendable Fund and the Education Enhancement Fund at a level of $4,734,139,108. for fiscal year 2007.

Despite the uncertainties and my common sense approach of level funding in my Executive Budget Recommendation, I am optimistic about Mississippi’s future in the near term as well as the long term. The record since the beginning of 2004 confirms that optimism. Prior to Katrina our state’s economy was generating more tax revenue without raising taxes, and growth of the state’s economy or Gross State Product (GSP) was the highest since 1995. Last year personal income in Mississippi grew by the highest rate since back in 1998, and employment grew more than any year since 1999.

Recently State Economist Phil Pepper noted, “The damage not withstanding we are optimistic about the future.”

Because I share that optimism, I also want to share with you today, as I have with the Legislature, my priorities for increased spending in FY 07, if the funds are available either from higher than predicted state tax collections or federal funds.

First, the state must pay its share or match requirement for federal public and individual assistance. This is required by the Stafford Act and other applicable federal laws. Although these payments will be spread over a number of years, a significant portion will be due in FY 06 and FY 07.

Within available revenue I will then propose increases in funding for education, especially higher education. Education is the number one economic development issue in Mississippi and the number one quality of life issue; therefore, it is the top priority of state government, and spending on education must continue to be the lion’s share of this budget.

Even though we have increased education spending substantially in Mississippi over the last several years, higher education has not participated in those increases. While state funding for K-12’s Mississippi Adequate Education Program, (and its predecessor) has increased 55% or $692 million annually, since FY 2000, our community colleges and universities actually are receiving less in state appropriations this year than they were in FY 2000. The universities have been cut $44 million or 7%, while their number of students increased 12%. Community colleges are receiving $42 million less in state support this year than FY 2000, a 20% reduction, while their number of students has increased 26%. While the community colleges have received increased funding for workforce training, they and the universities need and deserve higher appropriations in this budget.

It is my belief as well as my hope there will be sufficient additional funds to increase education spending at both the K-12 and higher education levels in FY 07.

The other key priority is to give state employees a pay raise.

At the beginning of this month the State of Mississippi had 31,230 non-education employees, the lowest number of employees since March 1999. State government is doing more with fewer employees. The average pay for State employees is $29,920. The overwhelming majority of these employees have not had a pay raise since January, 2003, when all classifications received a minimum re-alignment increase of $600. Before that it had been another 3 years since state employees got a pay raise. Therefore, most state employees have only received a $600 pay raise in the last 6 years.

Within available revenue I will propose that all state employees receive a pay raise in FY07. This pay raise should include an across the board increase for all employees; a portion of the realignment increases recommended by the State Personnel Board; and some funding for a merit pay model.

Let me close by saying the FY 2007 Executive Budget Recommendation proposes a starting point for budget consideration in the 2006 regular Legislative Session. It established my priorities, while it recognizes the uncertainties caused by Hurricane Katrina.

I look forward to working with the Legislature on this budget and other critical issues in next year’s Session.



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Governor Haley Barbour
P.O. Box 139 Jackson, MS 39205
Phone: 601.359.3150 Fax: 601.359.3741