Miss.'s 'balanced' budget not so balanced

Most every spring, Mississippi lawmakers laud themselves for having passed a "balanced budget," which is technically required by state law.

This year, the Legislature even voted to join a states' drive to try to force Congress to balance its budget a la the Magnolia State. If we can do it, they can do it.

But most every year, Mississippi lawmakers pretend a few very large expenses don't exist as they pass a budget and leave Jackson. They hope for a windfall to cover them by year's end with "deficit appropriations."

It's a fiscal sleight of hand that leaves the state's budget balanced on paper, but actually out of true for most of the year.

Legislative leaders also have patted themselves on the back for virtually eliminating the use of "one-time" money for recurring expenses. But when they come back to Jackson in the fall, they scrape up millions of dollars in one-time money to help cover the holes in agencies' recurring budgets.

This year's "deficit appropriation" tab was nearly $106 million. It sponged up nearly all of the "extra" year's-end revenue from the economy picking up.

Deficit appropriations have spiked in recent years. Fiscal 2011's total was $12 million. In 2012, that grew to $16 million. For both '13 and '14, it approached $99 million.

Medicaid and prisons are the main culprits. Both are doing a booming business. For this year, Medicaid spending busted the budget lawmakers had set by nearly $90 million.

Some deficits are unavoidable or unforeseen. A natural disaster — a hurricane or outbreak of tornadoes — can bring millions in unexpected expenses.

And it can be hard to precisely estimate costs for some agencies, such as Medicaid. As one lawmaker has said, "We don't know how many knee replacements Medicaid will have." Also, rolls have ballooned from the federal Affordable Care Act exchanges routing to Medicaid people who previously didn't know they qualified.

But even so, lawmakers often know they're shorting budgets and betting on the outcome. They sometimes use terms such as "anticipated deficits" and will haggle over how much to short one agency to help another.

For instance, this year lawmakers approved a "balanced" $6.27 billion budget for fiscal 2016. They covered the large Medicaid shortfall for the current year, but shorted the agency's projected costs for next year by $20 million or so.

Lawmakers also cut the Corrections budget by $12 million, shorting prisons more than $20 million total on projected expenses.

So, the balanced budget for the coming year could easily have a $30 million to $40 million hole in it even as the ink dries.

For the last several years, lawmakers as they set the budget have pretended the state doesn't have to pay more than $6 million a year for property insurance. They catch it on the back-end, as a "deficit."

As with someone's personal budget, the results of floating deficits could be disastrous if state revenue were to take a nosedive. State agencies would have to make drastic cuts. That's nearly impossible for Medicaid and Corrections unless they turn sick people and criminals away. Other budgets would have to be robbed.

But for fiscal 2015 and the coming year, the state has had what appears to be more than enough — $410 million — in savings, or the "Rainy Day Fund," to cover deficits if the bottom dropped.

In all, the state's budget appears to be in its best trim in years, recovering from the great recession that hit in '08. And Mississippi's minor tweaking of the books pales in comparison to Congress printing its own money as federal debt grows.

But is the budget truly balanced? Not until next year, after all the holes are filled.

Contact Geoff Pender at (601) 961-7266 or gpender@jackson.gannett.com. Follow @GeoffPender on Twitter.