State borrowing unclear as lawmakers debate tax cuts

WJTV File Photo

JACKSON, Miss. (AP) – The details of Mississippi’s state spending for the upcoming budget year beginning July 1 remain unclear as legislators also negotiate how much the state would borrow and whether it would cut taxes.

State money for fiscal year 2017 will total $6.35 billion, more than 90 million above the amount left after Gov. Phil Bryant imposed 1.5 percent midyear cuts on many agencies in January. The total budget includes money transferred from special funds to the state’s general fund and some money taken out of the state’s reserve fund.

But both the shuffling of funds and the midyear cuts make it unclear exactly how much each state agency gets in its budget.

House Appropriations Committee Chairman Herb Frierson, R-Poplarville, and Senate Appropriations Committee Chairman Buck Clarke, R-Hollandale, said Saturday many agencies would take reductions varying from 2 percent to 12 percent.

But shuffling, for example, moves money the Department of Public Health makes from fees paid to them for services they provide other state agencies to the state’s general fund. Similar changes for a number of state agencies were not reflected in the information given to legislators.

The cuts to state agencies come as legislators negotiate over how much the state plans to borrow in bonds in 2017 and whether it’s going to change tax policies.

Lt. Gov. Tate Reeves told reporters Friday that he’d like to hold the borrowing amount to $200 million, but House members have pushed for more borrowing to fund university projects.

Reeves also continued to push for tax cuts, saying lawmakers shouldn’t be deterred by current revenue weakness.

The Senate passed a $575 million tax reduction bill, including a phase-out of Mississippi’s $260-million-a-year business franchise tax over eight years. His proposal would also cut income taxes by more than $300 million, mainly for individuals, and lower self-employment taxes by $10 million.

House members have been negotiating about tax cuts, but have wanted to push their effective date back to Jan. 1, 2018, which means they wouldn’t decrease money for the 2017 budget. Reeves said Saturday he’s willing to negotiate over the start date.

Opposition from state representatives, mostly House Democrats, to cuts to the Department of Health and the Department of Mental health could boil over into that discussion.

They argued Sunday that they were among the most important services the state could provide and that money from a $375 million reserve fund could be used to shore them up.

“I will not just sit here when our mentally ill are going to be impacted and there is $375 million in our rainy day fund,” said Rep. Steve Holland, D-Plantersville.

Republican state representative Gary Staples said the tax money Reeves wanted to cut could be used to fund the agencies.

“If we do not pass franchise tax and three level income tax can we fund this agency?” Staples said in a rhetorical question. “Don’t you think the public health of the state of Mississippi is more important right now?”

Public Health and Human Services Chairman Sam Mims, R-McComb, said that once money was taken out of the reserve fund for one agency other agencies would try to follow. He said legislators did their best to present a balanced budget.

“This is a tough budget year, and we had to make tough decisions,” he said.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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