BRADENTON, Fla. - Mississippi Gov. Haley Barbour yesterday ordered budget cuts of 2% for most state agencies due to a shortfall in tax collections.
The cuts do not affect spending for debt service, some public education funding, Medicaid, public health, and certain social services.
With revenue falling 2.3% below estimates, the cuts are mandated by Mississippi law, which requires the state fiscal officer to balance the budget when revenue falls below estimates for the fiscal year.
The spending cuts amount to nearly $42 million of the nearly $5 billion general fund budget for fiscal 2009. Mississippi's total budget, including capital and other expenses, is $18.99 billion. Most of the revenue supporting the general fund comes from income and sales taxes.
"The past few months have made it clear our national and global economies are facing uncertain times, and it's imperative we realize Mississippi is not immune," Barbour said in a statement. "By cutting $41,970,231 in state spending, we are fully offsetting the revenue shortfall through October 2008, or one-third of the fiscal year."
The governor said that even with the cuts it is likely that revenues will continue to decline and make further reductions necessary later in the fiscal year.
Mississippi's unemployment rate was at 7.4% in September, the third-highest in the nation behind Rhode Island and Michigan.
Agencies are required to submit their proposed budget cuts to the Department of Finance and Administration's office of budget and fund management by Nov. 17. At that time, the cuts become effective.
Mississippi has $3.1 billion of general obligation debt and $437 million of notes outstanding. Approximately $1.1 billion of legislatively authorized debt remains unissued.
The state's GO bonds are rated AA by Fitch Ratings and Standard & Poor's and Aa3 by Moody's Investors Service.
