Analysis: Mississippi in line for savings account boost

Mississippi may be making its first big deposit into its savings account in several years, but state government is still lacks enough savings to ride out a substantial downtown in revenues.

Posted: Sep 10, 2018 9:23 AM

JACKSON, Miss. (AP) — Mississippi may be making its first big deposit into its savings account in several years, but state government is still lacks enough savings to ride out a substantial downtown in revenues.

The Department of Finance and Administration is still in the process of closing the books on the year ended June 30, but spokesman Chuck McIntosh said the department estimates the state will have about $55 million to put into the rainy day fund. Overall, McIntosh said estimates show state government finished the 2018 budget year $110 million in the black. That's higher than earlier estimates circulated among lawmakers. Most of the remaining surplus would go to financing improvements on state government buildings.

The deposit could come a year after lawmakers raised the legal limit on the savings account from 7.5 percent of the state's $5.5 billion General Fund to 10 percent of the fund. However, the state currently only has $290 million in what's properly known as the Working Cash Stabilization Fund, just over 5 percent of state revenue raised for the General Fund. The balance had been going the wrong way in recent years as Gov. Phil Bryant dipped into the fund to offset weak revenue. It had been above $400 million in the 2015 budget year.

Lawmakers in some years have intercepted money that would otherwise go to reserves, which might be an attractive proposition as the state considers a pay raise for teachers, demands for higher contributions to employee pension funds, and other election-year spending demands. However, House Appropriations Committee Chairman John Read, a Gautier Republican, said last week he thought such a diversion would be unlikely.

"I think it will go through," Read said. "The more you have, the better off you are."

Boosting reserves could improve Mississippi's ability to withstand the next recession without major cuts to services, and the last recession is a stark lesson in what can happen. General Fund spending fell 13.5 percent from its peak in the 2008 budget year to the trough in the 2010 budget year. Because of federal assistance to states, though, Mississippi didn't break open the piggy bank until 2012. The state spent nearly $800 million over three years, though, trying to forestall service cuts.

If revenue fell 11 percent in one year, as it did from 2009 to 2010, Mississippi would need more than $600 million to prevent cuts. The state presumably wouldn't have the money, since the rainy day fund is limited to 10 percent of the General Fund.

The Pew Charitable Trusts, which researches state financial issues, says rainy day fund balances rose nationwide in the 2017 budget year to enough to run a typical state government for 20.5 days, a new high. Right now, Mississippi could finance 19 days of General Fund spending, less than the typical state. If the $55 million deposit goes through, that would rise to 23 days.

The good news from Pew is that Mississippi's tax revenue is less volatile than an average state, meaning it moves up and down less. Of the three major Mississippi tax sources Pew examines, corporate income is the state's smallest and most volatile, followed by personal income taxes and then sales taxes. And improving state revenues got a vote of confidence last week when one of the three big credit rating agencies shifted its outlook for state government finances from negative to stable.

But Pew warned Aug. 29 that Mississippi and others have less money in the bank than before the last recession, saying reserves "could cover a smaller share of government spending than they could have heading into the 2007-09 recession."

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 115763

Reported Deaths: 3263
CountyConfirmedDeaths
Hinds7973177
DeSoto703979
Harrison522384
Jackson457884
Rankin394086
Madison383194
Lee357380
Forrest304678
Jones292484
Washington258399
Lafayette250443
Lauderdale2478135
Lamar225538
Oktibbeha202454
Bolivar201677
Neshoba1849111
Lowndes179962
Panola170040
Leflore167187
Sunflower162349
Warren154855
Monroe150673
Pontotoc147220
Marshall143129
Lincoln140157
Pike138456
Copiah137536
Scott125429
Coahoma124937
Grenada122638
Yazoo122234
Simpson121549
Union118825
Tate116839
Leake115041
Holmes114760
Itawamba113925
Pearl River113660
Adams108544
Prentiss106120
Wayne101722
Alcorn100112
George99218
Covington97527
Marion95042
Tippah90322
Newton86627
Chickasaw85526
Tallahatchie84526
Winston84121
Hancock84028
Tishomingo81241
Attala79426
Clarke75851
Clay69321
Jasper68717
Walthall63927
Calhoun62612
Noxubee59817
Smith59416
Montgomery54923
Yalobusha54514
Claiborne53716
Tunica53517
Lawrence51814
Perry49423
Carroll49312
Greene47818
Stone47514
Humphreys43816
Amite42513
Quitman4206
Jefferson Davis41011
Webster37613
Benton3416
Wilkinson33820
Kemper32615
Sharkey28514
Jefferson27610
Franklin2423
Choctaw2086
Issaquena1074
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 158701

Reported Deaths: 2680
CountyConfirmedDeaths
Jefferson23292377
Mobile16916315
Tuscaloosa10345140
Montgomery10250197
Madison935096
Shelby739063
Baldwin665869
Lee654665
Calhoun459961
Marshall439550
Etowah428551
Houston417034
Morgan416435
DeKalb342629
Elmore320853
St. Clair295542
Limestone287230
Walker279492
Talladega266435
Cullman248024
Lauderdale229442
Jackson215915
Autauga205931
Franklin205531
Colbert202132
Russell19493
Blount193225
Chilton188432
Dallas186627
Coffee177111
Dale176351
Covington174729
Escambia172730
Clarke135217
Chambers135044
Pike134113
Tallapoosa132987
Marion108129
Barbour10339
Marengo101922
Butler101140
Winston92913
Geneva9067
Lawrence85832
Pickens85218
Bibb84014
Randolph82716
Hale76830
Washington74912
Clay74412
Cherokee73814
Henry7176
Lowndes71328
Bullock64917
Monroe64610
Crenshaw60830
Perry5926
Fayette57713
Cleburne5698
Wilcox56812
Conecuh56113
Macon53620
Lamar4965
Sumter47221
Choctaw39212
Greene34216
Coosa2043
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