/Analysis Reeves touts rainy day fund, but not first time state’s reserves have been strong

Analysis Reeves touts rainy day fund, but not first time state’s reserves have been strong

Reeves soon followed up on social media with “huge news” The first time that our rainy day fund will be fully stocked is expected. This is how we weather crises such as recessions, storms, and any other disasters.” Some context may be helpful. It is unlikely that the Working Cash Stabilization Fund, commonly known as the rainy-day fund, will be full in the next few weeks. According to data compiled by staff of the Legislative Budget Committee, the fund was established in 1993 as a buffer for state revenue collections that do not meet projections. It was also filled to capacity in fiscal years 1995 to 1998 to ensure it was available in case of a shortage. The 2017 special session saw the law change to raise the cap from 7.5% of the annual general funds appropriation to 10%. If the rainy-day fund is fully stocked, this will be the first time that the cap has been raised to 10 percent. Based on recent estimates, there is a possibility that the amount in the rainy-day fund could be $4 million lower than the cap. It would still be remarkable to have a Working Cash Stabilization Fund worth $550 million – the largest in the state’s history. The state also has $101 million in its capital expenses fund, prompting the outgoing governor. Phil Bryant exclaimed on social media that “Mississippi has now been in a better fiscal position than ever before in its history.” Reeves made similar claims in the past. It might help to have some historical context. As mentioned earlier, the state’s rainy day fund was filled in the past at the 7.5 percent limit as opposed to the 10% cap. In addition, $500 million was in reserve by the state during those periods, primarily due to the settlement of the lawsuit against tobacco companies. The state’s general fund budget was only $3 billion in that period, as opposed to $6 billion now. This means that $500 million was much more of the total state budget in the 1990s and 2000s. This means that there have been times in state history when the state’s reserves were greater than what is available now, especially when you consider the size of the budget. Reeves boasted that the amount in the rainy-day fund is “4,000% more than when Democrats controlled it.” This is fiscal responsibility at its best. The Reeves campaign didn’t respond to inquiries to clarify what he meant by the reference to the 4,000% increase. The Legislative Budget Committee’s records show that 2003 was the last year of Democratic Gov. Ronnie Musgrove ended the fiscal year with $22.6 million in rainy day funds. After reconciling the books, the new fiscal year started with $51.8 million in rainy day fund. True, the Musgrove term occurred during a national recession which resulted in a decrease in revenue collection. The Legislature agreed to the Musgrove administration to continue the phase in of the largest teacher pay hike in state history. They also fully funded the state formula, which provides the bulk state money for local school districts’ basic operations. Reeves has seen the formula fall by $200 million each year during his tenure as lieutenant governor. The rainy day fund was also reduced to $18.9million at the close of fiscal year 2006. This was under Reeves’ tenure as Republican Governor. Haley Barbour. There is also the question of actual revenue collection. Reeves can boast that state revenue collection have been increasing. Revenue collections increased by a healthy 4.9% during the last fiscal year. After four years of slow growth, including one year in which the state received less revenue than it did the previous year, the recent fiscal year’s strong revenue collections are a result of the state’s strong revenue collection. This is only the fourth year since 1970. In the 1990s, there were several years when revenue growth was double-digit. History shows that Democrats have been more open to tapping into the rainy-day fund to avoid cuts than Republicans. However, during the current election cycle, many candidates for political office, both Democrats as well as Republicans, have pointed to Mississippi’s inability to invest in various programs. These include infrastructure, teacher pay, health care, and education. This has led to Mississippi being behind other states and the country in terms of economic growth. Robert Foster, a state representative who lost the Republican nomination to governor, endorsed Reeves during the primary contest. Foster stated that “to invest in students, we must invest in teachers.” This means that teachers must be properly paid for their work, not just during election years. If Reeves or the leadership had made an identical investment in teacher salaries to the $335 million made under the Musgrove administration, it would have adversely affected the ability to grow the rainy-day fund. Darrin Webb, the state economist, has noted that Mississippi’s economy grew by 2.2 percent between 2009-2018, compared to 22.1 per cent for the nation and 10.8 per cent for the four contiguous States. Reeves noted that in recent years, legislative leaders have made hard decisions to “to right-size” the state government. This has put the state in a position for future growth. Kelly Hardwick, executive director of the State Personnel Board, pointed out that 26414 state employees are now employed by the state, nearly 4,000 more than five years ago. Reeves stated that “when you succeed in right-sizing the government, you have more resources for other things.” At the same time, legislative leaders expressed concern over the lengthy waits and inability to access bureaus throughout the state to renew and obtain driver’s licences. Marshall Fisher, Department of Public Safety Commissioner, said that part of the problem was due to a lack of staffing. The state’s inability to hire medical examiners is also explained by Fisher. As with the driver’s licences bureaus, there is a way to fix this problem. That would include appropriating more funds to hire more people. Reeves and other legislative leaders have opted to concentrate on tax cuts and building reserve funds over the past eight years. It is up to the individual to decide if this is good or not._x000D