JACKSON – Seldom does Gov. Haley Barbour make a speech without referring to the $700 million-plus “budget hole” he was left by his predecessor, Ronnie Musgrove.

But in Barbour’s sixth year in office, the state’s budget hole not only continues, it has worsened.

In fiscal year 2004, Musgrove’s last in office, the budget hole was $694.4 million, based on the definition Barbour used during the 2003 campaign, and according to figures compiled by the nonpartisan Legislative Budget Committee staff.

For fiscal year 2010, which began July 1, the budget hole will be at least $850 million.

Mississippi law requires a balanced budget. It is not uncommon, though, for an agency to be underfunded during one legislative session, either by an honest underestimate of pending expenses or through a wink and a nod by legislators, who later make an appropriation the following session in the middle of the budget year to prevent a shortfall when the fiscal year ends on June 30.

One-time money continues

When Barbour discusses the roughly $700 million budget hole in the 2004 fiscal year, he basically is referring to the practice in the Musgrove administration of using so-called one-time money to pay for recurring expenses. That practice has continued under Barbour.

“The state of Mississippi has been using one-time money under all governors when we have economic downturns,” said Rep. George Flaggs, a member of the Legislative Budget Committee. Barbour is no different, he said, and added, “It makes more sense to use one-time money than it does to cut services or raise taxes.”

Barbour spokesman Dan Turner, when asked about the one-time money used during the current administration, said “The Legislature has not simply rubber-stamped” Barbour’s budget proposal.

“That said,” he continued, “Gov. Barbour has worked with the Legislature to steer the state toward sound management of taxpayer dollars. Each year, there has been some level of give and take between the legislative and executive branches. Saying that one governor budgeted this way and another governor budgeted that way is a gross oversimplification of the process.”

One-time money can mean many different things – for instance, money recouped by the Attorney General’s office as a result of a lawsuit settlement, or federal stimulus funds that are provided to support the budget.

Stimulus funds put to use

According to figures provided in late June by Senate Appropriations Committee Chairman Alan Nunnelee, R-Tupelo, $523 million in federal stimulus funds were used to plug holes in the 2010 budget.

Likewise, $95 million in federal funds were used to plug budget holes in 2004 during another national economic slowdown.

Barbour referred to that $95 million in one-time federal funds as part of the $700 million budget hole for fiscal year 2004.

“Gov. Barbour has made no secret of the fact that the federal stimulus package is one-time money,” Turner said. “That’s why he has insisted on prudent use of the money, and he has been equally vocal on warning lawmakers and the people of Mississippi that the stimulus money will run out.”

Turner also pointed out the governor has worked to build up reserve funds that can be used when sources of one-time money, such as federal stimulus funds, are exhausted. Those reserves were nearly depleted during the Musgrove administration.

One-time money also can be found by taking surplus money from “special fund agencies” for use in the general fund. Special fund agencies are those operated on specific fees or taxes.

For instance, barbers are levied a fee to fund the state Board of Barber Examiners. The largest special fund agency is the Department of Transportation, which is funded through a fuel tax.

On several occasions, one-time funds have come from transfers of money from the Department of Transportation to plug holes in the general fund budget; that happened during the 2009 session when $30 million was taken from DOT.

Earlier this year, Nunnelee said he does not believe all one-time sources of money are created equal. For instance, state law requires the Legislature to appropriate only 98 percent of the projected revenue.

Cushion

The 2 percent is set aside to provide a cushion in case revenue comes in lower than the projection. In recent years, the Legislature, with Barbour’s support, has changed the law to appropriate 100 percent of the projected revenue. That 2 percent – roughly $100 million – is considered one-time money.

Another source of one-time money is the roughly $100 million the state gets each year from the tobacco companies as part of the lawsuit settlement. State law requires that money to be placed in a trust fund, but in recent years the tobacco payments have been expended. Those funds are considered one-time money.

Essentially, funds are considered one-time money if it takes a change in law for them to be expended as part of the state’s general fund.

But Nunnelee said there’s a difference between using the 2 percent set aside or the tobacco payments for recurring expenses – money that will be available every year – and spending a one-time payment from a lawsuit settlement or a one-time agency surplus on recurring expenses.

Nevertheless, Barbour viewed those items as one-time money when he identified the $700 million budget hole he frequently mentions. And the staff of the Legislative Budget Committee also counts those items as one-time money.