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Magnolia Political Report #61
Monday January 24, 2005
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Lying In The Bed They Made
The legislature convened Tuesday, January 4th, for what promises to be one of the most difficult sessions in recent memory. State finances started heading south four years ago, but it wasn’t until last year that there was leadership to do anything about it. In fact, the impending fiscal train-wreck could be seen coming a long time ago, but the state officials kept piling on more spending anyway.
Though some progress was made last year, the chickens are coming home to roost this year. The state is faced with deficits in the current fiscal year, including a Medicaid deficit that could reach $290 million. If state government was level-funded in FY 06, there would still be an estimated shortfall in the neighborhood of $350 to 400 million. But level-funding isn’t likely.
Teachers are due an 8 percent pay raise that is the last installment of a pay-plan to get them to the Southeastern average. The raise will cost taxpayers approximately $100 million.
Fully-funding MAEP will cost even more money. Educators say they were shorted $79 million last year on fully-funding MAEP. They want that money back plus increases for FY 06. Their request amounts to over $360 million.
Increases in state employees’ health insurance premiums will cost about $35 million.
Several years of bad investment performance at PERS (Public Employees Retirement System) has left the system with a unfunded liability in the billions. The state is required to increase its contribution to the system by about 1 percent, which will cost an additional $35 million.
Last Fall, state agencies came before the Joint Legislative Budget Committee to make their spending requests for FY 06. All totaled, the requests amounted to over a billion dollars more than what was appropriated in FY 05.
The fiscal situation is as bad as it’s been in over a decade, but there are bright spots. The state’s economy is gaining steam. Revenues are projected to be $150 million over estimates.
Tax friendly legislators are fond of saying six hundred million dollars in savings can’t be found in a $3.65 billion state budget. They are ignoring the $3.8 billion in special funds the state spends each year as part of its overall budget of $12 billion. Over time many agencies have manipulated the system to eliminate general fund appropriations in their budgets, instead relying exclusively on special funds which are often out of site and out of mind during the budgeting process. The Attorney General and Secretary of State’s office are two primary examples. Since 1986 the AG’s budget has grown from $12 million per year to $26 million in FY05. During the same period the Secretary of State’s budget has approximately doubled.
Scream For Dean
Howard Dean received a boost from Mississippi for his bid for DNC Chairman when Mississippi Democratic Party Chairman Wayne Dowdy endorsed Dean’s candidacy. Dowdy joined with the Democratic State Party Chairs of Florida, Oklahoma, Utah, Washington and Vermont to throw their weight behind the one-time presidential front-runners candidacy.
Without a president in the White House, the next DNC Chair will have a strong hand in shaping the direction the DNC takes over the next four years. The race is turning out to be a battle between blue state liberals and red state moderates for control of the party. Dean, the darling of the blue state liberals, believes he can raise the money and motivate base Democratic voters needed to win back the White House after an eight year absence. His opponents, most notably former Congressmen Martin Frost and Tim Roemer, want to take the party in a more moderate direction, especially on cultural issues like abortion and gun rights.
Dowdy sticking his neck out for probably the most liberal candidate in the race is an interesting turn. If Dean wins, Dowdy will have capital with the new DNC Chairman. Not a bad thing for the state party. However, it’s a double-edged sword, because state Republicans will surely remind voters of Dowdy’s support for Dean each time Dean takes a hard-left position that is out of step with Mississippi voters.
The first benefit of Dowdy’s endorsement for Howard Dean is coming March 1st, when Dowdy will travel to Mississippi to raise money for the Mississippi Democratic Party at a Democratic Elected Officials Appreciation Dinner at the Clarion Hotel & Convention Center. General Admission tickets are $75.00 and reserved tables are $1000.00. For more information, contact the Democratic Party Headquarters for details at (601) 969-2913.
Share your opinions, scoop and observations with other political junkies on the new Magnolia Report Forum. We welcome your thoughts on Mississippi politics and the media, and we hope they will spur a lively debate among our readers.
The forum can become a great tool for grassroots democracy in Mississippi. Nationally, blogs and forums have kept politicians and the media more honest. Prior to the rise of the internet, if the story was ignored by the New York Times, Washington Post and the broadcast networks, it was swept under the rug. The on-line community has ended that monopoly. Case in point, when CBS News aired bogus allegations about President George W. Bush’s guard service, it was bloggers who pointed out the inconsistencies and demanded action. As a result, CBS News was force to retract the story and eventually hold several of its employees accountable.
The Magnolia Report Forum gives you the power to police politicians and the media or to just express your opinion on a particular issue. It’s your opportunity. We hope you’ll use it.
McCoy Is 0-2 In First Week Of Session
House leadership had two major set backs during the first week of the legislative session. The first came with their attempted override of Governor Haley Barbour’s veto of campaign finance reform. Leadership never even attempted to override the vote on the floor because of a narrow 7-6 vote in the committee. With such a narrow vote in the committee house leadership new they didn’t stand a chance on the floor of getting a two-thirds vote to override the veto.
McCoy’s second loss came on the tobacco tax increase he and his House leadership team covets. Not only did the $1 per pack legislation authored by Rep. Leonard Morris fail, but two amendments proposing lesser increases failed as well.
Is Gov. Haley Babour a potential candidate for national office? One Republican television commentator thinks so. In an appearance on FOX News' Hanity and Colmes show, former Speaker of the House Newt Gingrich touted Barbour as a potential "darkhorse" candidate for the GOP presidential nomination in 2008.
Barbour has connections throughout the nation with both the activists and the donors needed to win a Republican primary. Philosophically, he's much more in tune with GOP primary voters than potential candidates like Rudy Giuliani and John McCain. He's also much more politically adept than Sen. Bill Frist, who is also considering a run. Barbour clearly would be strong candidate in a primary. If he could win the nomination and square off against the Dems frontrunner, Sen. Hillary Clinton, he just might make Mississippi history.
Gingrich is not alone, at least in thinking Barbour might make the national ticket in 2008. During a speech in Gulfport, RNC Treasurer and Republican National Committeeman Mike Retzer pronounced Barbour “well qualified” to be a candidate. Retzer went on to say the timing would probably not be right for a presidential run, but that Barbour would be “one hell of a vice president.”
Secretary Of State Tuck?
Might a slip-up recently in the Times of South Mississippi prove prophetic? In a newspaper interview with Rickey Nobile about his career as a political cartoonist, the article referred to Amy Tuck as "Secretary of State Amy Tuck." Of course, Tuck is still lieutenant governor and Eric Clark is Secretary of State. However, Tuck's name has been mentioned in the rumor mill as a possible candidate for Secretary of State in 2007.
Clark beat Tuck by less than one vote per precinct in 1995 to win the position. Tuck went on four years later to become lieutenant governor, a position she's term limited out of when her current term expires. If she wants to remain a statewide elected official, Secretary of State is the most logical choice for her. Of course, it might mean challenging an incumbent, which is always a tough proposition. However, Tuck brings name ID and an ability to raise money to the contest. Then again, with Tuck on his heels, Clark could decide to step up to run for governor or lieutenant governor, giving Tuck an open shot at the office.
Another name that has surfaced for Secretary of State is Kelly Hardwick, Tuck's former Chief of Staff. Hardwick is rumored to be interested in the office no matter who runs. He's originally from Corinth and currently practices law with the Colom Law Firm.
Senate Election Special For Davis
Hernando native Doug Davis bested a field of three other candidates to win the Senate seat vacated by Sen. Bobby Chamberlin after Gov. Haley Barbour tapped him for a Circuit Court vacancy in DeSoto County. Davis is the son of DeSoto County Chancery Clerk Sluggo Davis. He currently works as a business development coordinator with First Security Bank in Hernando. In 1999, Davis worked on Sen. Bill Hawks’ campaign for lieutenant governor. Though candidates did not run under a partisan label in the election, Davis has announced he has affiliated himself with the Republican Party.
BIPEC Scores
The Business and Industry Political Education Committee (BIPEC) recently released its evaluation of legislators’ voting records for the 2004 session. BIPEC rated Senators and Representatives on a range of votes it deemed important to creating jobs in Mississippi. Issues scored included votes in favor of civil justice reform, fee reductions workforce training initiatives, and reducing the size of government. A score of 76 – 100 indicates a business champion; 56 – 75 indicates moderate business support; 41 – 55 shows marginal business help and a score from 0 – 54 labels a lawmaker as anti-business.
As Chairman of the Senate Rules Committee, Senator Trent Lott headed up the arrangements for President Bush’s inaugural events at the U.S. Capitol, most notably the swearing-in ceremony and the luncheon that followed. Lott used his position to give the Magnolia State valuable national exposure. His State Director, Guy Hovis, got a coveted spot on the inaugural program. Hovis, who was a mainstay on the Lawrence Welk show, sang a song penned by former “Singing Senator” and Attorney General John Ashcroft. Lott also invited the Alcorn State University choir to sing at the inaugural, which was watched by over 200,000 people on the capitol grounds and millions more around the world. The gift bowls given to the 250 VIPs who attended the post-swearing in luncheon were designed and crafted by a Gulf Coast company.
Do Mississippians have a beef with legislators over the $50 million Mississippi Beef Processors debacle? The facility closed after only three months of operations, leaving 400 workers jobless, suppliers with rubber checks and taxpayers holding the bag.
The processing plant was the self-described brainchild of then House Ag Committee Chairman Steve Holland and Ways and Means Committee Chairman Billy McCoy. Holland has said he and McCoy hatched the idea on a drive from Tupelo to Jackson.
McCoy has been quoted recently as saying he doesn’t intend to start pointing fingers. Maybe it’s time somebody does. Whoever is responsible for losing $50 million of taxpayer money should be held accountable.
The processing plant was a bad idea from the start. Richard Hall, owner and plant manager of the state funded beef processing plant, was not required to put up any capital for the project. Industry sources say his background was primarily in trucking, leaving him unprepared to handle such an operation.
Legislative leaders made much ado about a Mississippi State University study that said the plant could be profitable by its second year. However, the report contains repeated warning signs that the venture was risky. The report concluded, “Margins in this industry are extremely thin. Expertise and experience are critical in live animal purchasing, management of a slaughter facility and marketing of finished product. An existing market presence would alleviate the very difficult market penetration problems faced by a startup company.” The refrain that “margins are extremely thin” in the industry appear throughout the report. Anybody who read it should have seen the warning signs.
At least one publication has written accusations that McCoy leaned on MSU for a favorable report. If so, it’s likely he affected the assumptions they made in the study. The study bases revenue forecasts on an optimistic estimate for the cost of live cattle. It says, “The most recent 4-year average lightweight price of $35.00 per hundredweight was used for animal purchase. The most recent 10-year average liveweight price is $43.11 per hundred-weight.” The report concludes that “A few cents increase in liveweight price has dramatic impacts on profitability.”
No wonder Richard Hall didn’t sink any of his own capital into the operation. If only the legislature and Governor Musgrove would have been as judicious with the taxpayers’ money.
On December 6, Hall missed a payment of $325,000 that was due on a state-backed loan from Community Bank. He owes $49,000 for a natural gas bill. The state has paid $167,000 for his electric bill.
Hall closed the plant just before Thanksgiving and said he’d have it reopened within a week. That date slipped to January 1st. Our guess is that it will never reopen under its current ownership.
Mississippian are left owning a highly-specialized, $50 million facility in Yalobusha County. There’s not much it can be used for other than beef processing, an industry that has been on the decline for years. Because their loans are guaranteed by the taxpayers, Community Bank can sleep easy about the $35 million they are owed by Mississippi Beef Processors. If a buyer emerges, he or she will probably get the facility for pennies on the dollar. The taxpayers will eat the rest of the debt.
Several media outlets in the state have taken notice while others have been strangely silent. Here’s hoping they’ll all jump on the story so we can get to the bottom of who else is at fault and hold them accountable so nothing like this happens again.
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Merry Christmas From The Family
An astute reader passed the Magnolia Report a copy of former Governor Ronnie Musgrove’s Christmas letter to his friends, family and supporters. The tone of the letter sounds to us like he’s still running for something. He finds ways to complement all three of the state’s major universities, writes of his satisfaction teaching at Ole Miss, mentions plans to lecture at the Mississippi College School of Law, plugs his support for public schools and several charitable organizations and even mentions that he’s singing in the choir at First Baptist Church in Jackson. Our favorite line in Musgrove’s letter: “Of course, K through 12 education is never far from my heart or my mind, and I continue to enjoy the opportunity to work for stronger public schools in Mississippi…” Sounds like a candidate for something to us.
Movers and Shakers
Quinten Whitwell has moved to DeSoto County to join a law firm where his practice will include areas such as real estate, general litigation, corporate law, and lobbying. Whitwell is well-known around the state capitol, where he spent a lot of time lobbying in his capacity as Vice President of Public Policy of the Mississippi Association of Realtors. He plans to stay involved in at the capitol, lobbying several days a week while the legislature is in session.
State Treasurer Tate Reeves and his wife Elee are the proud parents of a healthy baby girl, Sarah Tyler, born December 8th. Elee and Tyler are doing well. We’ll wait to see what the legislature does with the Healthcare Trust Fund before we make a pronouncement on Treasurer Reeve’s state of mind.
Dr. Jason Dean, Governor Haley Barbour’s Education Policy Advisor, and his wife Courtney Rogers Dean, welcomed first child, Mary Bogan, into the world at 12:01am Christmas Eve. Both momma and baby are doing great...Daddy says he could use some more sleep.
Mississippi Republican Party Executive Director Arnie Hederman and his wife Melissa welcomed Arnold Smith Hederman, IV into the world on November 30th. Ash weighed in at 8 pounds, 10 ounces. Of course, he’s not old enough yet to say what his political affiliation is, but we hear he’s responsive to elephants and sleeps on his right.
Dave McClendon recently graduated from University Medical Center in Jackson and is joining Senator Thad Cochran’s DC staff as a fellow. His focus will be on healthcare policy.
Quotable Quotes
"The governor sure was angry last night. Somebody must have fed him a mess of bad turnip greens." Speaker Billy McCoy, referring to GHB being angry about the House stalling on his economic development bond package.
"Late last year Representative Steve Holland told a newspaper that budget problems were so bad the House “might have to shut the government down.” You know how Steve is, so I took all that with a grain of salt…until the power failure that closed the Woolfolk Building for a week. I’m not accusing anybody of anything, Steve,…but the Capitol Police reported a big black hearse, with Lee County plates and cattle horns on the hood, was spotted leaving the scene." Governor Haley Barbour, 2005 State of the State
