Budget Tap Dance about to Begin

One year Mama made me take Betty Lutz’s tap dancing class. Yuk!

But, I suspect a number of today’s politicians wish their mamas had been so forceful.

As legislative leaders gather to begin the great budget tap dance for fiscal year 2012, there is good news…and there is bad news.

First, some good news – state tax revenue for July and August slightly exceeded official projections, so no mid-year budget cuts are looming. To date, revenues are 3.6% and $19.1 million ahead of projections.

Now, some bad news – even if this trend holds, the state faces a budget shortfall of at least $500 million and maybe as much as $900 million for the 2012 fiscal year that begins next July.

More good news – legislative leaders and the Governor have agreed to hold $127 million in pending federal help for Medicaid until next year to help offset the budget shortfall; the state should have sufficient money in its rainy day to cover $75 to $100 million of the shortfall; and schools could hold $98 million in pending federal help to cover costs for next fiscal year.

More bad news – there will still be a substantial budget shortfall as access to nearly $2 billion in federal stimulus funding comes to an end.

Even more bad news – “the pace of economic recovery can be expected to remain slow,” said the IHL Center for Planning and Research in its latest state economic forecast. “This recovery hardly deserves the name,” began the usually reticent report, adding, “The Mississippi unemployment rate will remain high.”

One of the great scenes in the movie Chicago portrayed Richard Gere as the lawyer “Billy” tap dancing his way out of a tight situation. As Mississippi enters election season, incumbent statewide and legislative candidates find themselves in a very tight situation. How they handle themselves during the lengthy budget dance could have significant impact on their election chances. (The budget “dance” begins with the Joint Legislative Budget Committee hearings in mid-September and continues through the January to April legislative session.)

Despite the looming budget shortfall, some agencies want legislators to bail them out of current cuts while others want increases for the next fiscal year.

Voters are watching to see who, if anyone, steps out for tax increases, shuffles toward government reorganization, or stomps for more program cuts. In this tight situation, some or all of these will be necessary. If Governor Haley Barbour hadn’t held back money for 2012, the situation would be even tighter. Then, there is never mentioned fiscal year 2013, which promises to be a tough year too.

Yes, those who learned to tap dance at an early age will have an advantage over the late comers.

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