Fordice: Reserve he demanded is helping state today

Published 12:00 am Sunday, January 18, 2009

He died more than four years ago after having left office in 2000, so it wasn’t surprising that the name of former Gov. Kirk Fordice wasn’t even mentioned during last week’s State of the State speech and related events. But one change in Mississippi law he drove to passage was very much in evidence — and will be until financial times improve.

Fordice, who operated a construction business in Vicksburg before deciding to seek office, was absolutely appalled after taking the oath to learn that it was standard practice for Mississippi legislators to pledge every dollar of the state’s anticipated income to specific spending categories for each coming year.

As it happened, his first year in office, 1992, was a “crisis” year, solely because the 1991 Legislature had pledged more money than the state’s taxpayers were delivering. That meant there were reductions in allocations and, further, that the stage was set for the Legislature to increase the general sales tax rate from 6 percent to 7 percent, where it remains, to meet the “emergency.”

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Fordice vetoed that tax increase, but it passed over his veto. As a concession to the new governor, if nothing else, legislators promised to stop allocating every penny of the revenue forecast. They would, instead, pledge only 98 cents of every dollar, and the balance would go into a reserve — commonly called a rainy day fund — so that colleges, schools and every other operation of government could have more assurance that pledged dollars would actually arrive. In the event of a shortfall, the reserve could be tapped. More significantly, “crises” and the accompanying “crisis mentality” that usually translates into tax increases could be avoided.

The cushion has been built and depleted in years since, most notably emptied during the tenure of former Gov. Ronnie Musgrove, who followed Fordice. It has been built back up during the six-year tenure of Gov. Haley Barbour and contains $392 million today.

Economic conditions are again sour. The most recent estimate says the state’s revenue forecast, made a year ago, will wind up $175 million to $310 million short of the $5 billion prediction. In response, Barbour has directed two rounds of cuts. There may be more. He is also advocating cautious draws of the reserve to try to make it last up to four years. Some in the Legislature, quite predictably, want all the money, want it now and want it spent. That’s as irresponsible as not having a reserve in the first place.

Mississippi can’t do anything to escape the consequences of the national economy. But a tip of the hat, at least, is due to Kirk Fordice. His insistence on a reserve not only will soften the impact of the unforeseen shortages, it has blunted recurrence of conditions that 17 years ago led to the state’s last general sales tax increase.