February 24, 2010

GOVERNOR BARBOUR STATEMENT ON SB 2688 VETO

Governor Haley Barbour today vetoed Senate Bill 2688 because it spent too much of the state’s reserves and ineffectively divided funds among several agencies. The bill delayed inevitable government reorganization and relied on one-time money to cure recurring budget woes.

“This legislation would virtually guarantee higher taxes within a few years,” Governor Barbour said. “Senate Bill 2688 perpetuated a destructive pattern of relying on one-time money to pay for ongoing expenses. The bill avoided the inevitable: Restructuring state functions to continue a high level of service to Mississippians. We need a new approach to operating state government not higher taxes to feed its bureaucratic appetite.”

GOVERNOR’S VETO MESSAGE FOR SENATE BILL 2688

February 24, 2010
TO THE MISSISSIPPI SENATE:
GOVERNOR'S VETO MESSAGE FOR SENATE BILL 2688

I am returning Senate Bill 2688: "AN ACT TO DIRECT THE STATE FISCAL OFFICER TO TRANSFER CERTAIN SUMS TO THE BUDGET CONTINGENCY FUND DURING FISCAL YEAR 2010 FOR THE PURPOSE OF PROVIDING FUNDS TO RESTORE A PORTION OF THE BUDGET CUTS MADE TO CERTAIN AGENCIES DURING FISCAL YEAR 2010; TO DIRECT THE STATE FISCAL OFFICER TO TRANSFER SPECIFIED SUMS TO CERTAIN AGENCIES FROM THE AMOUNT TRANSFERRED TO THE BUDGET CONTINGENCY FUND; TO AUTHORIZE THE AGENCIES TO WHICH THE FUNDS ARE TRANSFERRED TO ESCALATE THEIR BUDGETS AND EXPEND THOSE FUNDS FOR THE PURPOSES AUTHORIZED BY LAW, SUBJECT TO CERTAIN CONDITIONS; TO DIRECT THE STATE FISCAL OFFICER TO TRANSFER A CERTAIN SUM TO THE SCHOOL DISTRICT EMERGENCY ASSISTANCE FUND AND TO AUTHORIZE THE STATE DEPARTMENT OF EDUCATION TO ESCALATE THE APPROPRIATE BUDGET BY THAT AMOUNT AND EXPEND THAT SUM FOR THE PURPOSES AUTHORIZED BY LAW, SUBJECT TO CERTAIN CONDITIONS; AND FOR RELATED PURPOSES" without my approval, and assign the following reasons for my veto.

As required by state law and the Mississippi constitution, I ordered across-the-board spending reductions to balance the Fiscal Year 2010 budget. While I support using our reserve funds to soften the impact of these cuts, any restoration must be fiscally responsible and conscious of the likely duration of the current decline in revenue.

Our State faces a serious budgetary problem, with revenue coming in below the Joint Legislative Budget Committee’s estimate for each of the last 17 months. This problem is not likely to end soon; in fact, we may not yet have reached even the midpoint. According to many experts, including the non-partisan National Governors Association and National Association of State Budget Officers, state revenue may lag significantly until 2014 or 2015.

I am vetoing Senate Bill 2688 because it spends too much, depletes our reserves too quickly, and fails to address the serious shortfall in the corrections budget. We must prudently spend our reserves so they will be available for use during four fiscal years. To preserve the Health Care Trust Fund for use over the course of four fiscal years, we should spend no more than $58 million of its current $218 million balance. Senate Bill 2688 spends almost $70 million from the Health Care Trust Fund for Fiscal Year 2010 alone. That is simply too much; particularly, when $115 million of the Rainy Day Fund, or one-third of its original balance, has already been spent in Fiscal Year 2010.

Spending too much of our reserves now is doubly problematic. First, by using too much one-time money in this fiscal year, we set up a budgetary cliff for future budgets. Second, and more importantly, without these reserves to offset future shortfalls, lawmakers will have only one choice for additional revenue: tax increases (which I vigorously oppose). Senate Bill 2688 virtually guarantees tax increases by future legislatures. Spending now and taxing later is bad fiscal management, and unfair to taxpayers.

Senate Bill 2688 also fails to adequately restore funding for the Department of Corrections, whose budget has been cut $29.5 million so far. If most of this reduction is not restored, corrections will be forced to release thousands of prisoners to balance its budget, a clear threat to public safety and a costly burden on local governments. If this shortfall is not restored, I will be forced to take some or all of the $19.6 million of my ARRA discretionary funds that I allocated to give to the Community and Junior Colleges in the next fiscal year, and reallocate it to corrections for this fiscal year. Senate Bill 2688, therefore, effectively reduces spending on Community and Junior Colleges.

We should restore some of the cuts that have been made, but we should do so in a way that both preserves our reserves for future years, and adequately funds critical functions of government.

For these reasons, I urge the members to sustain the veto and reject Senate Bill 2688.

Respectfully submitted,
Haley Barbour
Governor