Governor Barbour

January 14, 2009


Declining tax collections force tighter spending limits

Governor Haley Barbour today ordered further spending cuts, trimming the Fiscal Year 2009 budget by $200 million due to declining state tax collections.

On Wednesday, the Governor reduced state agencies’ budgets by an additional $158.3 million, bringing the total cuts for the year to $200 million. All departments and agencies were cut 5 percent except for court-ordered settlements, Medicaid services and the Mississippi Adequate Education Program. MAEP was trimmed 3.49 percent, or about $76.6 million.

The cuts were necessary because state tax collections fell 9.5 percent below the estimate for December and total collections fell 8.3 percent below the estimate for the month. Year-to-date revenues are 3.06 percent below expectations.

The Governor must trim spending as mandated by Mississippi Code §27-104-13, which requires the State Fiscal Officer to balance the budget when state revenue falls below estimates for the fiscal year.

“State law requires a balanced budget, which forces me to reduce agencies’ budgets to compensate for continued declines in state revenues,” Governor Barbour said.

Like most states, Mississippi is adversely affected by the national and international economies.

The revisions will not impact court-ordered settlements, such as the Ayers settlement and court-ordered Chickasaw Cession interest, Medicaid services, Homestead Exemption and Debt Service.

State fiscal experts believe revenues for Fiscal Year 2009, which ends June 30, will fall between $175 million and $310 million below estimates. The Governor trimmed agency budgets $42 million, or 2 percent, in November, due to declining revenue.

State law allows the Governor to cut any department or agency by five percent of its appropriation; however, no department or agency can be cut by more than five percent until every department and agency has been cut five percent.