Road and Bridge Crisis Causes Great Ponderation

Riding the rural highways of Mississippi, it’s easy to see why so many citizens want taxes cut. Vistas of disrepair and deterioration overwhelm. Strapped folk in these areas see little benefit from state spending. To them, every precious dollar they send to state and local governments must seem to disappear down endless holes. They are beyond taxed enough already.

Now, these highways they depend on for work, church, and groceries have begun to buckle and crack. Bad roads will worsen their plight unless and until money is spent to fix them. But there is not enough money for repairs, especially for poor, rural areas. And there won’t be without more tax revenues.

This infrastructure calamity has become a matter of great ponderation in Jackson.

Lt. Gov. Tate Reeves told a Stennis Institute gathering last week the matter is one legislators can’t ignore, adding road and bridge repair is a “core function” of government. True, so long as pondering is different from ignoring.

You see, legislators have known about, and pondered, this problem for years. Back in 2009 their own PEER Committee told them the backlog for just bridge repairs had grown to $975 million. Then, in 2013, PEER told them the bridge backlog had jumped to $2.7 billion. In 2015 the Mississippi Economic Council told them nearly $6 billion was needed to fix both bridges and highways.

Naturally, each bigger number created a need for greater ponderation.

Today, money needed to fix roads and bridges is nearing $7 billion.

Meanwhile, legislative leaders have a self-made dilemma. Back in 2015, business leaders warned them bad roads would hurt the state economy and asked them to raise taxes. Legislative leaders promised to take care of the issue. Instead, they’ve pondered.

This past summer, legislative leaders listened to their chosen tax consultant tell them user taxes should be the primary means of funding government functions. They liked what they heard.

Well, the gas tax is the user tax Mississippi levies to pay for roads and bridges. It was last increased in 1987. For years now, it has provided too little money to cover both new construction and repairs. The easy and, according to the tax consultant, proper fix would be to increase the gas tax.

Anti-tax rural folks have a different thought. They want tax cuts, not tax increases, not even just a few cents per gallon of gas. They don’t get, or don’t care, that good roads are essential for a good economy.

Meanwhile, roads and bridges deteriorate more each year, putting everyone’s economic well-being at risk.

Impatient business leaders want legislative leaders to keep their promise. Republican legislators in control understand, but want to keep their jobs.

As drivers jerk and shudder down ever more rugged highways, they can rest assured of one thing. Mississippi’s legislative leaders, like Pinky and the Brain, will ponder this matter with great deliberation.

PS – Reeves said possible help from Donald Trump’s infrastructure plan would now be included in their ponderation.

 

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Trump Tweets Unnerve Trent Lott

“He is very capable of doing a switcheroo really quick, which can be a good thing or it can not be.” This was former Senate Majority Leader and Mississippi Senator Trent Lott talking about president-elect Donald Trump.

Switcheroos, as Lott calls them, are becoming a hallmark of Trump’s transition to the presidency. He says one thing one day, then changes it the next. His team says one thing, then he says another.

In its story quoting Lott, Politico.com found itself unable to decide if the “mixed messages and shifting realities of Trump world” are a “byproduct of Trump’s unconventional approach to communications or a more systemic dysfunction.”

The online news source said, “Trump allies and Republicans eager to work with him and capitalize on the remarkable governing opportunity he has delivered them have themselves been stymied from time to time by the president-elect’s mixed messages and consistent inconsistencies. They, too, aren’t sure about which Trump tweets or conversations to take literally — or even seriously.”

Lott is one of those.

“A lot of our allies are very nervous about whether they can count on us,” he said.

Lott told Politico that Trump’s incessant tweets unnerve him.

“The tweets unnerve me. I see how you can use that to go around and over the traditional media and how many people get his tweets. But it unnerves me because I’m kind of old school.”

One thing Trump is not is old school. He is unconventional, intends to remain unconventional, and will do unconventional things as President to deliberately “unnerve” his opposition of the moment and keep them off balance.

“President-elect Donald Trump won’t end the onslaught of posts on Twitter that fed his unconventional campaign, even after taking on the formalized duties of the Oval Office later this month,” says a story on Bloomberg.com.

“You know what?” said incoming White House press secretary Sean Spicer. “The fact of the matter is that when he tweets, he gets results.”

Spicer said Trump’s use of Twitter plus Facebook and Instagram will “absolutely” continue.

Of course, this is another switcheroo. On CBS’s “60 Minutes” in November he said he was rethinking his use of social media. “I’m going to be very restrained, if I use it at all, I’m going to be very restrained,” he said.

Unconventional and unrestrained, such a President will unnerve millions more than Trent Lott.

His tweet in December that, “The United States must greatly strengthen and expand its nuclear capability,” prompted fear across the globe of a new nuclear arms race.

His tweets to General Motors and Toyota threatening punitive taxes if they locate manufacturing in Mexico have unsettled global corporate leaders.

But perhaps the most unnerving aspect of all was Spicer’s admission that no-one knows what Trump is going to tweet until after it hits. “He drives the train on this,” Spicer told the Wall Street Journal.

Sorry Trent. Old school is out. Switcheroo is in. The Donald is going to keep us all on the edge of our seats.

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Beware of Leaders with Unchecked Shadows

History tells us when those who yield to their shadow selves choose leaders of their ilk, calamity, often war, follows.

Carl Jung labeled the dark side of self as “the shadow.” His psychiatric research into personality found people to have inner shadows associated with feelings of guilt, fear, hate, anger, selfishness, etc.

Upon looking deeply into himself, C.S. Lewis said “And there I found what appalled me; a zoo of lusts, a bedlam of ambitions, a nursery of fears, a harem of fondled hatreds. My name was legion.”

Parker Palmer, founder of the Center for Courage and Renewal, teaches we must know and confront our inner shadows to become whole or “authentic”.

“In critical areas like politics, religion, business, and the mass media, too many leaders refuse to name and claim their shadows,” says Palmer. “With shadows that go unexamined and unchecked, they use power heedlessly in ways that harm countless people and undermine public trust in our major institutions.”

He was echoing Plato who said, “In all of us, even in good men, there is a lawless wild-beast nature.”  Plato cautioned that tyrants begin as “protectors,” then “the lion and serpent element in them disproportionately grows and gains strength.”

How many times have we seen leaders pretend to virtuousness only to see their dark sides rear up to bring them down?

Then, there are those who manipulate our dark sides to gain power. They play to our fears, anger, and selfishness. As they rise to power, they breed more followers of like mind. “A leader,” Palmer explained, “is someone with the power to project either shadow or light” and who “shapes the ethos in which others must live, an ethos as light-filled as heaven or as shadowy as hell.”

In today’s world, more and more leaders are rising up who play to the shadow selves of their people – Putin in Russia, Netanyahu in Israel, Erdogan in Turkey, Sisi in Egypt, Duterte in the Philippines, Trump in the U.S., and more on the rise in Europe.

We can see it at the state and local levels, too, where the politics of division and self-interest overwhelm the good of the whole.

When we allow our shadow selves to guide us, we open the doors of government to the “looters” and “moochers” that Ayn Rand wrote about. We set up the pathways to tyranny that Plato warned us about.

“Alexis de Tocqueville, put it eloquently,” said Ronald Reagan, quoting the historian in his famous “evil empire” speech — “Not until I went into the churches of America and heard her pulpits aflame with righteousness did I understand the greatness and the genius of America. America is good. And if America ever ceases to be good, America will cease to be great.”

Our challenge, then, is to dwell more in the light than in the shadow and become like the teachers whose inner light stimulates young people to grow and flourish and the pastors whose guiding light does the same for their congregations.

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A New Year’s Resolution for State Government

Resolved:  State government will only provide the services our people need and only tax enough to cover costs for these needs.

Hmmm.

Many folks will unpack this resolution in different ways. Some will confuse “need” with “want.”  Others will severely limit the needs government should cover. Let’s shine a little light on this.

The 10th Amendment to the U.S. Constitution gives states tremendous power to meet the needs of their citizens.

The Mississippi Constitution says our state government exists “solely for the good of the whole” and emphasizes the importance of public “safety and happiness.”

So, our state government has the constitutional power and the constitutional purpose to provide services Mississippians need. Now “the whole” means all the people, not some of the people or just the people in power.

Balancing the needs of the poor and the rich, the old and the young, the Coast and the Hills, etc., for the benefit of the whole is the great challenge of state government. That’s why compromise – the seeking of balance – is the heart and soul of a democratic republic like ours.

As noted, public safety is a constitutional priority. So too are public schools. Our constitution mandates the state maintain free public schools (legislators think this means state and local government). There are no more important economic and social needs the Legislature will address than these two. Legislators seem to understand the public safety issue. They will debate the depth and breadth of school needs during the upcoming session. Let us hope the New Year will see school needs, dare I say it, adequately addressed, along with public safety.

Community colleges and universities have needs; their students have needs. But there is no constitutional requirement that the state address them, other than “happiness” and “the good of the whole.” One of our great hurdles in economic development is our low educational achievement level. We need more graduates and more of them to stay in Mississippi.

Transportation infrastructure is not a constitutional duty. But, our constitution clearly shows its importance by making eminent domain power available for “roads and bridges for public conveyance.” We have a growing road and bridge crisis.

Let us hope the New Year will see community college, university, and transportation needs appropriately addressed.

Healthcare, mental and physical, is not a constitutional duty. However, since 1862 our constitution has emphasized the importance of providing care for “those persons who, by reason of age, infirmity, or misfortune, may have claims upon the sympathy and aid of society.” Mississippi’s health ranking among the 50 states is dead last. Nursing homes, hospitals, community clinics, residency training, and more are regulated by and depend upon state government, especially Medicaid. A vast majority of states do much more than Mississippi to cover these needs. Let us hope the New Year will see us do better.

And, let us sustain the many “happiness” services government provides – hunting, fishing, gambling, museuming, librarying, politicking, retiring, and so on.

Happy New Year!

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Strangulation Budget Hits State Employees, Poor

Merry Christmas state employees. The budget proposed by Lt. Gov. Tate Reeves, House Speaker Philip Gunn, and their budget committee colleagues targets you. If you get to keep your job, they want you to work harder and do more for no more pay. The budget is bad for your retirement (PERS) too. Oh, but you will get a tiny tax cut.

The proposed budget is $195 million less than the twice-cut current budget and cuts nearly every agency. It would eliminate funding for almost 2,000 currently unfilled positions and remove civil-service protection to make it easier for agency heads to fire workers.

Gunn warned agencies “to pay strong attention to this budget.” They will be expected to operate “at the leanest levels possible.”

This is, in effect, government by strangulation. Republicans have a stranglehold on state government and will do whatever it takes to strangle spending so they can cut taxes.  Doesn’t matter if you’re already a high performing, efficient agency or not, you’re getting cut (except for K-12 and a handful of special programs).

Not long ago these same legislators touted performance-based budgeting, where high performers would be sustained and low performers eliminated. So much for that.

Yes, the controversial phased-in business and income tax cuts passed last year are built into this budget.

Emily Wagster Pettus with the Associated Press commented, “Mississippi’s economy continues to grow slowly, and tax cuts are projected to reduce the money that state government collects to pay for schools, mental health care, Medicaid, county health clinics, restaurant inspections, the state Crime Lab, casino regulators, county livestock shows and other services.” Universities and community colleges face 6.7% cuts.

How does this affect PERS?  Besides investments, the retirement system depends on wage and employment growth. This budget strangles both.

Cutting government spending, and staffing, through performance-based budgeting is one thing. Strangling the good parts of government along with the wasteful parts in order to afford untimely tax cuts is quite another.

Gov. Bryant seems to recognize this. In his budget proposal he calls for the merger of “state agencies, boards and commissions” and the consolidation of “certain functions across state government.”

The Governor notes that mergers and consolidations don’t generate immediate savings, but can have major savings over time. That and elimination of wasteful and duplicative programs is a far better approach than strangling all of government.

On the other hand, he and legislative leaders want to strangle Medicaid which provides health and nursing home care for the poor in a state whose national health ranking is once again dead last. Since the federal government matches state Medicaid funding by a 4.9 to 1 ratio, the proposed cuts would reduce federal matching funds by $106 to $117 million. Paradoxically, Vice President-elect Mike Pence is working to make expanded Medicaid matching funds available without Obamacare strings.

So, state government’s stocking stuffers this year look to be tax cuts for the better off, spending cuts for the hard up, and ashes for state employees.

Merry Christmas!

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Is Out-of-State Student Growth Good for Mississippi Taxpayers?

“USM, seeking students, reduces out-of-state tuition,” read the recent newspaper headline.

“The idea is to reverse a 2,000-student enrollment dip by pricing a USM education below some public universities in nearby states, and attract enough high-schoolers from Houston, Dallas and San Antonio to raise overall revenue,” explained the Clarion-Ledger story. USM cut annual tuition for out-of-state students by 40%, from $16,529 to $9,964.

Four years ago this change would have been illegal. Until 2012, state law required Mississippi’s universities to charge out-of-state students “not be less than the average cost per student from appropriated funds.”  That would be the $16,529 figure.

In 2012, legislators amended the law to give the IHL Board the authority to waive this requirement: “The Board of Trustees of State Institutions of Higher Learning may, in its discretion, consider and grant requests to approve institution specific policies permitting the waiver of out-of-state tuition when such an official request is made by the president or chancellor of the institution and when such request is determined by the board to be fiscally responsible and in accordance with the educational mission of the requesting institution.”

The rationale of the old law was that state taxpayers should not subsidize tuition for out-of-state students.  That is still the law with regard to community colleges (with limited exceptions).

The argument over subsidizing tuition for out-of-state students is an old one. Ole Miss has argued for decades that out-of-state students, like tourists, bring money into the state. Economic impact statements were composed to back up this argument.

Since the 2012 law was passed, out-of-state students have caused most of the enrollment growth among universities. From 2009 through 2014 (latest published IHL numbers), total headcount enrollment increased from 73,712 to 79,704. However, in-state enrollment fell slightly from 58,453 to 58,175. Out-of-state enrollment at our two largest and growing universities, Ole Miss and Mississippi State, is currently 41% and 34% respectively.

As universities demand higher appropriations from the Legislature and more bond money for new buildings, are legislators aware much of this will go to fund out-of-state student growth?

In 2013 IHL adopted a new formula for allocating state appropriations. The formula, driven significantly by student credit hours generated by each university, includes credit hours generated by out-of-state students, but does discount them by 15%.

Since state appropriations for universities aren’t growing significantly, the more students there are in the formula the less money each institution gets per student. Are legislators aware how much the allocation per in-state student has fallen?

The USM decision also brings to light another question. “USM has cut staff, but still has a larger university’s buildings and faculty,” the newspaper article reported.

So, is it better for the taxpayer and state to fill such unused capacity by discounting out-of-state tuition? Or would it be better to scale back and reduce capacity at shrinking universities and add capacity at growing universities?

Legislators should answer these questions in favor of Mississippi taxpayers, which is not always IHL’s priority.

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PERS’ Deficit “Mortgage” Ballooning, Not Shrinking

You know how a mortgage works right? You make your monthly payments and gradually your mortgage balance comes down.

Pat Robertson, Executive Director of the Mississippi Public Employees’ Retirement System (PERS), tells legislators and retirees to think of PERS’ massive $16.8 billion funding shortfall as a mortgage: “Having an unfunded liability (deficit) is analogous to having a mortgage and making mortgage payments faithfully every month.”

Well, PERS’ deficit “mortgage” does not work like yours and mine. Despite four years of payments, the balance has ballooned, not shrunk. And the number of years to pay off the mortgage has jumped from 30 to 40.6 years.

In October 2012 PERS increased public employer contributions to 15.75% of wages to start making those faithful mortgage payments on its then $14.5 billion deficit. Robertson assured all that this high rate would improve the funded liabilities ratio from 58% to 80% by 2042.

Four years later, the unfunded amount has risen from $14.5 billion to $16.8 billion and the time to reach the 80% funding level target has moved out to 2053.

In other words, four years’ worth of payments didn’t lower the “mortgage” balance any. Instead it increased by $2.3 billion and the mortgage’s term had to be extended, making it 40.6 years from its start in 2012.

Be aware of this, per Robertson in 2013: “GASB requires a maximum amortization period for the UAAL of not more than 30 years.”  (GASB means Governmental Accounting Standards Board; UAAL means Unfunded Actuarial Accrued Liabilities.)

So, PERS is out of compliance, again, with accounting standards.

To get in compliance without legislative action, PERS would have to increase employer contributions from 15.75% to 17.2% for 30 more years.

In an excellent analysis, blog site Jackson Jambalaya points to significant structural problems at PERS (http://kingfish1935.blogspot.com/2016/12/pers-continues-to-slip.html), concluding that, “The numbers that should be getting smaller are getting larger while the numbers that should be getting larger are getting smaller. In other words, PERS is going in the wrong direction.”

Key findings cited in the blog include:

“The ratio of active employees to retirees is getting worse as it declined from 2.3 active employees/retirees ten years ago to only 1.5 in 2016.”

“The total amount of employee and employer contributions was $1.593 billion. However, PERS had to pay $2.48 billion to retirees.  The deficit between the contributions and payments was $886.8 million.”

“Investment income was only $217.8 million – not enough to cover the $886.8 million deficit. Thus PERS had to dip into assets to pay benefits. The total assets of the PERS portfolio fell from $24.8 billion last year to $24.1 billion in 2016.”

Read the blog, then download and read the 2016 Actuarial Valuation Report at http://www.pers.ms.gov.

Better yet, get your legislators to read them – the numbers not Robertson’s customary rationalizations. Legislators are the ones who need to find the political courage to fix PERS’s ballooning deficit. An ever higher employer contribution rate is not the fix needed.

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