Budget: Barbour’s plan starts a give-and-take process

Published 12:00 am Sunday, November 23, 2008

Gov. Haley Barbour’s proposed budget for the state’s spending year starting July 1 is advisory. He knows that. The power to tax and spend in Mississippi rests exclusively with the Legislature, which is expected to release the Joint Legislative Budget Committee recommendations next month. The budget won’t be final until lawmakers, who start their regular session Jan. 6, go home in April — if then. Remember, lawmakers actually adjourned two years ago without completing this responsibility.

Barbour’s budget, however, is remarkable, in that the Republican governor in his sixth year proposes his first tax increase, at least the first “enhancement” he’s been willing to call a tax increase.

It’s modest. It would raise Mississippi’s 18 cents-per-pack excise tax to 42 cents for major brands and 61 cents for off-brands. Barbour’s reason for the differentiation, which would be hard to implement, is that big-name makers already are paying the state $100 million per year as a result of the damage suit settled in 1996 by former Attorney General Mike Moore. The off-brands aren’t chipping into the settlement pool, so their taxes would rise more.

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Barbour would direct the new tax revenue, about $80 million per year,  into the $5.1 billion general fund — barely adding a drop into that barrel.

Both prospects put the Barbour plan at odds with the Legislature. Both chambers, at times, have passed legislation that would raise the per-pack tax by 50 cents or $1 with no brand variation. The House, especially, has insisted that the tobacco revenue be assigned to a specific spending category, most notably Medicaid. While intended destinations for the money have varied, the House has never agreed it should go to the general fund.

Vicksburg’s senior delegate to Jackson, Rep. George Flaggs, is a member of the JLBC. Although a Democrat, he’s consistently not supported higher taxes. Though he likes Barbour’s idea this time, he says it’s not enough. “It is far too conservative,” Flaggs said. “The 24 cents per-pack increase proposed by the governor will not help us meet the essential needs of the state and help us prepare for future needs.” Flaggs is for an 82-cent across-the-board increase to $1 per pack, which is much closer to the national average.

Otherwise, Barbour is proposing a mix of borrowing from state reserves, reduced allocations and reallocation of money to help the state balance its budget during what promises to be a lean year. This year’s spending plan already has been trimmed by $42 million with two more quarters to go. More adjustments are expected during the next seven months.

Yet it’s time to put a new spending plan on the table. Barbour has done so, calling it responsible. Flaggs says it’s a good starting point and it will be altered in weeks to come. He also foresees no major conflicts, which, in and of itself, is a good thing.