In the comedy Groundhog Day, Bill Murray’s character, Phil Connors, gets caught in a time loop. Every day his alarm wakes him up blaring “I Got You Babe” and he painfully relives the events of the prior day. The cycle of misery is only broken when Phil realizes he needs to change.
Reading about Mississippi’s fiscal condition in newspapers across the state is eerily reminiscent of Groundhog Day—only there is no personal epiphany that seems capable of breaking the repetitive false narrative.
To explain what I mean, we’ve got to get a little nerdy.
Let’s start with a simple breakdown of the three basic “money measures” of government. “Revenue” is what government takes in from taxes and fees paid by citizens and businesses. “Actual spending” is simply what government actually spends in a given fiscal year. An “appropriation,” sometimes referred to as a budget, is an amount the Legislature projects to spend in an upcoming fiscal year.
This stuff isn’t rocket science, but it seems to confuse a lot of folks who write about it.
“Revenue” and “actual spending” represent real dollars--out of your pocket, and into government programs. “Appropriations” are based on revenue projections, or guesses, of how much the state will collect from taxpayers. Legislators rely on these guesses to make budgets for the future. The predictions are seldom right.
And yet, most articles addressing Mississippi’s financial health bypass consideration of “revenue” and “actual spending” to focus on “appropriations,” the least reliable measure. Worse still, many of those articles confuse appropriations with actual spending.
Take, for instance, a recent AP column which suggested that state government would have an additional $800 million to spend now if spending had grown at the rate of inflation between 2010 and now. The problem is that this calculation did not start with actual spending in FY 2010, but with FY 2010 appropriations. (As an aside, the same article claimed that Mississippi’s economic output was less now than before the recession in 2008. At least according to the U.S. Bureau of Economic Analysis, our state GDP is $10.5 billion higher now than it was then.)
Looking at revenue and actual spending is absolutely essential to understanding whether state government is growing or contracting, and at what rate.
In 2010, the Mississippi Department of Revenue reported total receipts of $6.56 billion in taxes and fees. In 2016, the Mississippi Department of Revenue reported total receipts of $7.89 billion. That’s a 20.3% growth in state collections, which exceeds the inflation in the same period.
Spending is a bit more complicated. In FY 2010, state general fund spending was $4.32 billion and total state spending was nearly $18.2 billion. By FY 2016, state general fund spending was up to $5.67 billion and total state spending had climbed to $19.33 billion. That’s a 31 percent growth in general fund spending, which definitely exceeds inflation in this period, and a 6.2 percent growth in total spending, which does not.
But, here’s where digging in the weeds counts. FY 2010 spending, which occurred at the height of the “Great Recession,” included hundreds of millions in “one-time” federal stimulus and “Rainy Day” funds. So even starting with FY 2010 spending, versus appropriations, may paint a less than accurate picture without context.
To highlight this point, take a trip a few years back — before temporary infusions of federal funds from Hurricane Katrina and the recession — to FY 2004. Between FY 2004 and FY 2016, Mississippi’s general fund spending increased by 64 percent and its total state spending increased by 58 percent. Inflation in that same time period was about 29 percent.
If your eyes are bleeding from all the numbers, it boils down to this: the state is not “missing” hundreds of million in revenue. When we are having these discussions, it merits reiterating that the money the state does collect comes out of your wallet. Allowing you to keep what is yours to begin with is not an “expense” of government.
Over the years, both revenue and spending have steadily ticked up. To the credit of Gov. Phil Bryant, Lt. Gov. Tate Reeves, and Speaker Philip Gunn, they have slowed that growth, worked toward government that lives within its means, and made efforts to reduce the tax burden on Mississippi’s families and job creators. Much work remains, but I suspect that’s what their supporters elected them to do.
The next time the fiscal equivalent of “I Got You Babe” appears in print, claiming Draconian spending cuts or lamenting the danger of tax relief, hit the snooze button.
Russ Latino is the State Director of Americans for Prosperity, a free market advocacy group. He and his wife live in Madison with their two children.