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Did Musgrove mislead public on Medicaid bailout?

By By Sid Salter
Feb. 1, 2002
Did Gov. Ronnie Musgrove knowingly mislead the Mississippi Legislature and the public on his proposed $148 million bailout of the state's Medicaid program last week?
State Tax Commissioner Ed Buelow said he told Bill Renick Musgrove's chief of staff that the governor's FY03 state budget plan had a serious flaw prior to Musgrove's press conference announcing the plan to the public and Legislature last Friday. The flaw?
Buelow said he told Renick that escalation of collections would only bring in about $50 million not the $100 million Musgrove cited in his public presentation.
Musgrove based his proposal on the the premise of electronic transfer of weekly tax payments from 4,200 Mississippi companies who pay more than $20,000 per month in state sales and use taxes rather than the present monthly collections.
Only one electronic filer
Buelow said from a practical matter, conversion to a weekly capture of the taxes would result in the commission actually collecting three weekly payments per month, not four. "We would collect only about 75 percent of what the governor is estimating," said Buelow. "We told them that."
He also said the the $100 million Musgrove cited was a gross tax collection figure that ignored a myriad of statutory tax diversions.
Those diversions include: Educational Enhancement Fund, State Aid Road Fund, Fair Commission, telecommunications, automobile sales tax, ad valorem, municipal diversion, air and water grants, contractor's tax, boll weevil management, and the bad check reserve. Both Musgrove and Renick former state legislators like Buelow know the diversion list by heart.
A $50 million mistake?
Given Buelow's take on Musgrove's proposal, it would seem that the governor's FY03 budget recommendations have a $50 million hole in them that undermines the credibility of the entire package. Why would Musgrove present such a plan when the state's chief tax collector tells his staff in advance that the numbers just don't add up?
Beyond the fact that Musgrove's numbers on the sales tax escalation appear flawed, the fundamental question remains whether a combination of floating state bonds, escalating sales tax collections and cannibalizing the tobacco settlement payments is sound fiscal policy upon which to base the state's budget.
Any way you slice it, it seems the Legislature and Musgrove who in reality share the responsibility for the Medicaid deficit equally still have some difficult decisions to make.
Embrace the Medicaid expansion as a necessary fiscal evil in the poorest state in the union and set about to pay for it or make program reductions and spending cuts to bring the state budget into line. The Legislature authorized the expansion of the Medicaid program in Mississippi and now they must reap the political whirlwind with Musgrove.
In order for any of Musgrove's tax collection escalation plans to work, the Legislature would have to make fundamental changes in existing law. Political pressure against those changes will be huge. If Musgrove made a $50 million mistake in his proposal, the Legislature will ignore it and likely should.

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