8/19/2009 6:00:00 PM EDITORIAL/Reeling in spending
Leaders are urging state agencies to watch their spending as Mississippi tax collections fell significantly short of expectations in the first month of the budget year.
Gov. Haley R. Barbour last year was forced to order budget cuts of $200 million from the $5.6 billion budget.
Unfortunately, this year, the Legislature spent even more and passed a $6 billion budget.
The predictions are dire. State revenue for July 2009 dropped $56 million, or 21 percent, when compared to July 2008.
And last month's projected revenue missed the budget target by $26.2 million, or 11.27 percent.
Unless the economy improves dramatically, we are certain to see cuts across the board again.
Neshoba County has ordered a 6-percent reduction in spending on anticipated lower revenues for the 2010 budget.
About the state shortfall, Gov. Barbour said, "We cannot ignore the fact that revenues continue to fall below our expectations. State agencies must spend tax dollars responsibly and keep in mind that cuts may be needed in the current fiscal year. The effects of the current recession will continue to impact the state budget in the months and years to come."
That is wise advice, but not only during a recession. All businesses, from newspapers to grocery stores to car dealers to restaurants are slashing spending. Note that we said "spending." Certainly the private sector seeks new customers and additional revenue, but that is nothing new. When confronted with tight budgets, it is our spending we watch.
State and local government would be wise to follow the lead of the private sector.
Government is funded by taxpayers and entrusted with the fruits of its citizens' labors. Wasteful spending and over taxation is not just fiscally irresponsible, but a squandering of liberty.
The Legislature - either by being overly optimistic or unrealistic - has crafted a budget based on its trust in taxes that's already failing in the first month. Sales tax collections missed expectations by more than 10 percent; income taxes missed by more than 17 percent; and tobacco taxes missed by right at 18 percent.
Yet, House Speaker Billy McCoy, D-Rienzi, has said he agrees with Barbour's assessment that agencies should closely watch their spending, especially while the economy is shaky.
"We just don't know really how this is going to play out," McCoy said.
Shouldn't the Legislature have thought of that before they passed a bigger budget?
When legislators convene in January, their concern should be finding ways to reform, reduce, and streamline government so it spends less.
Decreasing spending is a sure way to fix the budget. As we have seen from last month's numbers, relying on tax revenue to increase is risky.
Many banks are still not lending and small businesses are hurting. The severe tightening of credit is going to impact our local communities by stunting growth and costing people jobs, which will eventually impact state revenues.
Legislators are loathe to make cuts in education, Medicaid or other entitlements which they perceive might cost them a vote.
But we ask legislators to be courageous and do the right thing, like local governments and the private sector are doing.
Still, McCoy said that based on conversations he has had with business people across Mississippi, he believes economic activity is slowly increasing.
"I believe that things overall are beginning to move forward some," McCoy said. "Maybe I'm being overly optimistic."
We hope legislators do the right thing and make the necessary cuts and that the voters reward those who do the right thing.
