Setting safe estimates on how much revenue flows into the state’s coffers in the coming years is the key to managing a $70 million budget surplus, state Treasurer Tate Reeves said Thursday.

Speaking to the Vicksburg Rotary Club, Reeves agreed with comments made by Gov. Haley Barbour Wednesday that the unexpected money came from sales taxes as Mississippians spent federal aid and insurance checks after Hurricane Katrina.

Each January, the Legislature convenes and setting a spending plan for the fiscal year starting in July is on the agenda. That plan is based on revenue projections made by state fiscal experts.

For the year just-ended, the money topped the projection, which Reeves said is a good thing.

&#8220We have to do a better job of having more conservative revenue estimates. That’s one of the reasons we have a surplus today,” Reeves said.

Reeves said when he took office in 2004, the state revenue fell $720 million short of expectations – about 20 percent – due in part to overly promising estimates of tax revenue.

&#8220One thing we know about revenue estimates is that they are always going to be wrong,” he said. &#8220That’s what got us in trouble in the first place.”

For the fiscal year that ended June 30, revenues from state tax collections were reported to be up to $4.33 billion from $3.94 billion last year.

Reeves, 31, a first-term treasurer and former Trustmark National Bank executive recited a list of statistics he described as &#8220great progress in the past fiscal year,” chief among them reducing the state’s net debt burden by $88 million even while new borrowing took place.

The challenge posed by the state’s Medicaid was a &#8220difficult one for Mississippi,” Reeves said, mirroring similar problems in other states for the state-administered health care program.

Discussions are still ongoing between the state and the federal government on the immediate future of a program that Reeves said miscalculated by $91 million what it owed the federal government.

Included in those discussions is the plan the agency came up with to assess a 1.5 percent levy on revenues at all hospitals, including private ones who previously do not pay it, a plan Reeves mentioned briefly.

Later Wednesday afternoon, Gov. Barbour announced in a release that he was recommending an alternative program that would require private hospitals to pay approximately $27.5 million a year for the redistribution of gross revenue assessments.

Hospitals are objecting to that levy and some legislators have called it a unilateral tax being created by the governor who has no such authority.

When the topic turned to the state’s economic recovery following Hurricane Katrina, Reeves’ stressed the need for legislation at both the state and federal level that encouraged private sector-based economic development.

&#8220We’re are seeing a lot of federal dollars flowing into Mississippi,” he said, but added the long-term recovery will &#8220require private sector reinvesting in Mississippi.”

Reeves testified before the U.S. Senate Finance Committee a month after the devastating storm in a hearing geared toward using the existing federal tax code to help rebuild areas decimated by Katrina, an appearance he said was instrumental in the creation of the Gulf Opportunity Zone Act of 2005.

Reeves, who serves on the board of the Mississippi Business Finance Corporation, a conduit for the many tax-free bonds and other incentives for business that grew out of the GO Zone, surmised that the state should see about $3 million in investment from those bonds.