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The ABCs of the Mississippi Budget

September 7th, 2012

In preparation for the upcoming release of The Nuts and Bolts of the Mississippi Budget: A Taxpayer’s Guide to the Mississippi Budget and the approaching Budget Hearings, we’d like to explain some of the terms¹ commonly used when discussing the state budget.

ABC

Agency Budget Requests: Agency Budget Requests are prepared by each state agency for consideration by the Joint Legislature Budget Committee (JLBC).  Every agency request must contain the mission of the agency, a description of the duties and responsibilities of the agency, and a five-year strategic plan for the agency that includes performance objectives and achievements.

Appropriation: An appropriation is a law that allows the state to spend money.  State appropriations pay for various state services including: education, highways, and public health.  Each year the state enacts around 120 appropriations bills.

Budget Appropriation Process: Through this process, the State Legislature and Executive Branch work together to:

  • Identify the state’s needs for the upcoming year;
  • Determine how much money is available; and
  • Designate projected money available for the funding of state services for the next year.

Budget Hearings: Each year, agencies must make decisions about their budget needs and priorities and submit their budget requests for approval by the Legislative Budget Office and the Governor by August 1.st In September, the JLBC conducts hearings to discuss all of the agency budget requests.  These hearings give committee members the opportunity to ask specific questions of agency directors.  Sessions are open to the public and usually take place two to three weeks after Labor Day.

Built-in Costs*: New costs arising from new or expanded programs which are deemed as mandatory due to state or federal law, court order or previous legislative commitment are called built-in costs.  The calculation of built-in costs is often difficult—while a new program may be mandated, the level at which it is to be funded is not mandated.

Committee: There are several committees that participate in the budget-making process:

The Joint Legislative Budget Committee is composed of 14 legislators, half from the Senate and half form the House of Representatives.  The Committee is chaired by either the Lieutenant Governor or by the Speaker of the House of Representatives and the chairmanship alternates between them on an annual basis.

This year’s members are:

Chairman Philip Gunn, Speaker, House of Representatives

Vice-Chairman Tate Reeves, Lieutenant Governor

Other Members – Senate

Terry W. Brown, President Pro Tempore, Senate

Eugene S. Clarke, Chairman, Senate Appropriations Committee

Joey Fillingane, Chairman, Senate Finance Committee

Terry C. Burton, Chairman, Universities & Colleges Committee

Dean Kirby, Chairman, Public Health & Welfare Committee

Willie Simmons, Chairman, Highways & Transportation Committee

Other Members – House of Representatives

Greg Snowden, Speaker Pro Tempore, House

Herb Frierson, Chairman, House Appropriations Committee

Jeffery C. Smith, Chairman, House Ways & Means Committee

George Flaggs, Jr., Chairman, House Corrections Committee

John L. Moore, Chairman, House Education Committee

Preston E. Sullivan, Chairman, House Agriculture Committee


Revenue Estimating Committee:
This committee examines economic trends and estimates the amount of revenue that the state will collect in the next fiscal year. Its estimates are based on current economic indicators and its opinion about the economy’s growth potential.

Members of this Committee include:

Darrin Webb, State Economist

Kevin J. Upchurch, State Fiscal Officer

Lynn Fitch, State Treasurer

J. Ed Morgan, The Commissioner of Revenue of the Department of Revenue

Debbie Rubisoff, Director of the Legislative Budget Office.

Executive Budget Recommendation: The Executive Budget Recommendation is prepared by the Office of Budget and Fund Management and contains the Governor’s recommendation for a balanced budget for the upcoming fiscal year.  It usually includes a letter to the Legislature that explains the Governor’s priorities for the budget.  In some states the Governor’s budget is the basis for the budget the Legislature enacts; however, in Mississippi, the Governor’s budget is advisory.

Federal Funds: Federal Funds are earmarked by the U.S. government for specific state programs.  They are appropriated each year by the Mississippi Legislature, but must be spent in keeping with federal rules.

Fiscal Year (FY): The yearly accounting period for which budget decisions are made.  The fiscal year for the state of Mississippi runs from July 1st of one year to June 30th of the next year.

General Fund: General Funds come from general state tax collections (mainly income and sales taxes) and pay for many key services provided by our state, including K-12 education, colleges and universities, and corrections.

Lapse*: The unexpected portion of any General Fund appropriation which is returned (or lapsed) back to the General Fund at the close of the fiscal year.

Major Objects of Expenditure*: This term refers to the nine expense categories used within the statewide accounting system.  These nine categories are as follows:  Salaries; Travel; Contractual Services; Commodities; Capital Outlay—Other than Equipment; Capital Outlay—Equipment; Capital Outlay—Vehicles, Capital Outlay—Wireless Communication Devices; and Subsidies, Loans and Grants.

Performance Measures*: Our state budget uses statistics to quantify the results achieved by all government programs.  Performance measures are included in agency budget requests and in appropriation bills for the majority of the State General Funds. The three types of performance measures are utilized with our state budget system are:

  1. Program Outputs (Volume);
  2. Program Efficiencies (Cost per Unit); and
  3. Program Outcome (Results/Quality).

Special Funds: Special Funds are established through state statute or constitutional provisions that earmark funds for a specific purpose.  Like General Funds, they must be appropriated annually, but these funds are not usually subject to the same level of debate. The Department of Transportation is an example of a Special Fund agency that derives some of its funding through a tax on fuel.

State Budget: The state budget is the collection of laws which determine how the state collects and spends resources.  It is passed each year and includes spending decisions for each service that the state provides and revenue decisions affecting every state resident.

State Support Funds: Another way to classify funds is by state support.  State Support Funds include both State General Funds and State Support Special Funds.  However, Federal Funds and agency-generated Special Funds are not included in this category.

Strategic Plan*: A strategic plan is a 5-year plan prepared by an agency that establishes long-range goals for the agency and a course of action to achieve those goals.  Strategic plans are submitted by each state agency along with their annual budget request.

Coming Up…
This blog post included a sample of the many terms associated with our state budget.  Be on the lookout for our new release, The Nuts and Bolts of the Mississippi Budget, which will include over 40 useful key terms.

In the future, MEPC’s website will be updated to include a “Glossary of Terms” which you can refer to as you remain engaged in our state’s budget process.

Author: Francinia D. McKeithan, Policy Analyst/ SFAI Policy Fellow

¹All terms marked with an asterisk (*) provided by the Legislative Budget Office’s Website

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