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State spending $260 million less now than 2008 when factoring in inflation

Members of the House Appropriations Committee listen to House Ways and Means Committee Chairman Jeff Smith, R-Columbus, left, answer questions about a 2018 bill. The amount of money appropriated to pay for state government for the last fiscal year – 2018 – is $260 million less than what was spent in fiscal year 2008 in inflationary dollars.
Members of the House Appropriations Committee listen to House Ways and Means Committee Chairman Jeff Smith, R-Columbus, left, answer questions about a 2018 bill. The amount of money appropriated to pay for state government for the last fiscal year – 2018 – is $260 million less than what was spent in fiscal year 2008 in inflationary dollars. AP

The amount of money appropriated to pay for state government for the last fiscal year – 2018 – is $260 million less than what was spent in fiscal year 2008 in inflationary dollars.

State leaders, Gov. Phil Bryant, Lt. Gov. Tate Reeves and Speaker Philip Gunn, would argue the reduction in spending was needed to “right-size government.”

“You will also be encouraged to know we have dramatically cut the cost of government by reducing the number of state employees in the last seven years by nearly 5,000,” the governor said in his State of the State speech in January. “This effort has resulted in a savings of more than $64 million for the taxpayers of Mississippi.”

That most likely will be a large issue in state elections later this year. In other words, were the cuts in state government and accompanying tax cuts what were needed for the well being of the state or was more funding needed in areas like education, health care and transportation?

The 2007 session of the Mississippi Legislature was much like the current session – it was being held in the year of statewide elections.

Hank Zuber would like to see half as many general sessions of the Mississippi Legislature.

And like this year, in 2007 the state’s financial condition was a little better than it had been in immediate prior years.

Thanks to that improving financial condition, and most likely because it was an election year, the Legislature, for the first time since 2003, another election year, fully funded the Mississippi Adequate Education Program.

Then-Gov. Haley Barbour originally opposed full funding of MAEP, which is the mechanism that provides the state’s share of the funding to operate local school districts, but acquiesced just before the session began.

The 2007 Legislature also provided state employee pay raises – the last across the board increase they have received.

The following 2008 session started out on the same high note in terms of state revenue. But later that year the so-called Great Recession hit, resulting in a historic downturn in state revenues and ensuing multiple cuts to education and other state agencies.

So, it could be argued that for many years the 2008 fiscal year budget passed in the 2007 session was a high water mark in terms of state spending, which may or may not be a good thing depending on one’s political perspective.

As it turns out, the fiscal year 2008 is still a high water mark in terms of state spending when accounting for inflation. In 2008, general state appropriations was $5.63 billion. In 2018, it was $6.01 billion.

But when factoring in a modest annual inflation rate of 1.4 percent, using the average for that time period from the U.S. Bureau of Labor Statistics, it would take $6.27 billion to match the spending from 2008 or, most importantly, to achieve the same level of purchasing power.

And remember during that time, the Legislature passed additional programs that added to the cost of state government, such as a $100 million-plus pay raise for teachers in 2014.

Most would agree the pay raise for teachers was needed, a good investment. But it added to the cost of state government while the Legislature was not appropriating enough money to keep up with inflation for the local school districts to pay for commodities, books, electricity and the such.

Democratic Central District Public Service Commissioner Cecil Brown, a former state fiscal officer and former key member of the House Appropriations Committee, helped compiled the inflation adjusted budget numbers using information from the Legislative Budget Committee and the federal Bureau of Labor Statistics.

When accounting for inflation, it is clear that state government has more responsibilities that it must meet with less money.

The citizens of Mississippi can decide whether that is good or bad. It all comes down to political perspective and philosophy.

This column was produced by Mississippi Today, a nonprofit news organization that covers state government, public policy, politics and culture. Bobby Harrison is Mississippi Today’s senior Capitol reporter.

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