Hearing “record surplus” or “best financial shape in history” followed up with proposals for new “tax cuts” from Gov. Tate Reeves, challenger Brandon Presley, and other campaigning politicians? Take those boasts with a massive grain of salt.
Here’s why. All those politicians intentionally ignore a huge and growing financial deficit.
When Gov. Tate Reeves took office in 2020, balances in the state’s capital expense fund and working cash stabilization fund plus excess general fund tax collections totaled under $1 billion. By early 2023 that total increased to around $4 billion. Thus the politicians’ proclamations.
However, during that same period a major liability steadily increased by about a similar amount – $3 billion. Had that liability just been funded enough to keep it level, there would be no “record surplus.”
Of course, the story is much more complex than that. For example, part of the surplus resulted from underfunding government agencies and programs – none more onerous than the Mississippi Department of Health. On the other hand, the surplus would have been greater had the Legislature funded recent projects as usual with bonds rather than cash.
So, what is that major liability? The PERS deficit.
When Gov. Haley Barbour created his PERS Study Commission in 2011, the deficit was just over $12 billion. It hit $20 billion in 2022. That means the deficit averaged an increase of about $725 million a year over the past 11 years. Those increases occurred despite the PERS Board increasing employer contributions multiple times.
The PERS Board recently proposed to bump up employer contributions again, this time to 22.4% of payrolls. That would generate about $345 million in new revenue annually. Also, Mississippi Today reported the PERS Board may finally be looking to implement some changes to future benefits.
However, neither the proposed contribution increase nor the reported benefit changes would reduce the huge and growing deficit any time in the near future, nor stop the ever increasing costs pushed out to local governments.
With so much cash in hand, Reeves and other state leaders (or Presley if he gets elected governor) have no excuse to let this financial sore continue to hemorrhage. Forget income, grocery, and other tax cuts. Commit the billions needed to stabilize PERS. Then fix the plan by reworking current and future benefits, including the COLA. Nothing less will work. (Note: The revealed changes being considered by the PERS Board look to have far less impact than the Barbour commission recommendations.)
This reality perspective of the state’s financial situation will likely be missing from campaign speeches. But boasts about “record surpluses” and “best financial shape” should be recognized for the hyperbole they are.
“I, wisdom, dwell together with prudence” – Proverbs 8:12.
Bill Crawford is a syndicated columnist from Jackson.
