The process of developing a state budget for Mississippi is never-ending. There are steps in the process occuring nearly year-round.
Work in earnest – at least the work seen by the public – began last week on Mississippi’s $32-plus billion state budget to fund education, public healthcare, law enforcement, transportation and other services.
The 14-member Joint Legislative Budget Committee met publicly for two days to hear from some state agency leaders on their budget requests for the next fiscal year, which begins July 1.
Before the 2027 legislative session begins on Jan. 5 (always the first Tuesday after the first Monday of the year), the Budget Committee will develop a budget recommendation. That proposal serves as a guide or starting point for legislators when they meet in the new year to develop a plan to fund all state services.
Used to, the Budget Committee, which includes the lieutenant governor and speaker who alternate yearly as the chair of the panel, would meet for a month in late summer or early fall to hear from scores of state agencies about budget requests.
Now, the Budget Committee meets with a select few and depends on written requests that agency leaders had been working on during the summer. It is of note that the work on the next fiscal year’s budget begins behind the scenes for the agency leaders not long after the current budget year started on July 1.
In short, work on state agency budgets is a never-ending process.
One of the key steps in that process is when the Budget Committee and governor meet in the fall to develop a revenue estimate. That estimate represents the amount of revenue anticipated to be collected by the state during the upcoming fiscal year which runs from July 1 until June 30 of the following year.
If actual revenue collections do not meet that estimate, the governor is forced to make mid-year budget cuts or dip into reserve funds to offset the shortfall.
During the legislative session, which begins in January, as stated earlier, the Legislature will work to appropriate the anticipated revenue to fund state services. The revenue estimate made by the governor and Budget Committee is important since knowing how much money is available is a crucial step in any budgeting process. But its importance is mitigated by the fact that the Budget Committee can, and often does, meet during the legislative session sans the governor to change that estimate.
At any rate, near the end of the three-month session (about four months the first year of every four-year term), legislators are supposed to come up with a budget.
Often, they have to extend the session or go into special session when they have disagreements or roadblocks to completing the budget, but it always gets done.
This current fiscal year, the overall state budget is a whopping $32.02 billion, including $13.11 billion in federal funds,
Federal funds make up a significant portion of the budgets for multiple state agencies, including Medicaid, Human Services, Environmental Quality and Transportation.
The portion of the budget that receives the most attention is the general fund (mostly revenue from such items as the sales tax, income tax and a litany of other taxes, including the so-called sin taxes on alcohol, cigarettes and gambling.) The general fund is often combined with the state-support funds, which include other taxes and revenue, such as the 1-cent sales tax for education, the annual tobacco lawsuit settlement payments and others.
The general fund and state support funds total $9.22 billion. These are the funds legislators have the most discretion in how they are spent and are the funds that generally result in the most disagreements in the process.
The budget also is made up of $9.68 billion in special funds, generally fees or taxes to fund specific agencies. A lot of these agencies are small, such as boards that regulate various professions. The groups being regulated pay a fee to operate the agency. The largest special fund agency is the Department of Transportation, which is funded with a motor fuel tax and with federal funds.
There are multiple steps and moving parts associated with building a state budget each year. Yet, somehow those agencies are always funded.
And the budget cycle never stops.
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