What should we do with our surplus?

April 7th, 2014


MERIDIAN — State revenue surplus more than we expected, not more than we need.

    Did we really have a surplus in the state budget? It depends on what you mean by surplus. The surplus created by the recent increase in revenue estimates for creation of next year’s budget means that we have had more money than we expected, not more than we need.

    While revenues are finally rebounding, they are coming up from a deep trough that caused, among other things, teacher layoffs, reduced per pupil spending at grade schools and high schools, increased college tuition rates, and a dramatic shortage of state troopers.

    The revenue surplus is due to understandably conservative revenue estimates that were far below actual revenue collections and spending that was kept largely at recessionary levels. Needs have grown, but state support for education, public safety, and other things that bolster our economy has just recently gotten back up to 2008 levels. Furthermore, providing those services has gotten more expensive, so spending at 2008 levels actually gets us less than it did in 2008.

    But instead of restoring our commitment to those services, Mississippi lawmakers are using much of the revenue gains we have made to build large reserves so they can contemplate a future tax cut. As revenues have come in over projections, we have wisely begun to build up our reserves again. Those reserves helped us mitigate the devastating effects of the recession. However, they do not need to be filled all in one year while our schools, health, and public safety are hurting.

    When Mississippi legislators made their budget recommendation for FY 2015 before the session, they proposed keeping $548 million unallocated for reserves, partly “for use in future years to provide tax relief to improve Mississippi’s competitiveness.”  That would take us in the wrong direction.

    We can all agree that we want our state to be competitive and add jobs. Tax cuts sound good, but they won’t accomplish those goals. Most of Mississippi’s weaknesses arise from a failure to invest enough resources in the things that would work to make our economy strong. What would really help us be economically competitive with other states? We need better schools, a college-educated workforce, and healthier communities. If we give away the revenue gains we’ve made over the last couple of years, we’ll continue to hurt the very things that will build our economy.

Sara Miller

Mississippi Economic Policy Center


Back to main news page