Bennett: Budget shortfall manageable
By By Steve Gillespie / staff writer
Oct. 28, 2002
State Treasurer Marshall Bennett is now in his fourth term after being first elected to office in 1987.
He also has served as president of the National Treasurers Association; president of the National State Auditors, Comptrollers &Treasurers Association; and chairman of the National College Savings Association.
Bennett, originally from Tchula, earned his bachelor's and law degrees from the University of Mississippi. Bennett was a recent guest of The Meridian Star editorial board.
The Meridian Star: What are the budgetary projections for Mississippi?
Bennett: We're in the middle of the budget cycle now of projecting 2004. Can you imagine trying to project the future in this day and age 15 months in advance especially when you base your prediction on data from previous years that have not been normal?
We have never before experienced three years in a row of below-revenue projections. And we haven't had three years of negative stock market returns since 1932.
We have to weather it. Fortunately our problem is manageable. We have a $200 million shortfall. Tennessee has a $1 billion shortfall, Florida has a $1.4 billion shortfall, California has an $11 billion shortfall. That is unmanageable.
Mississippi's shortfall is manageable with a 5 percent budget cut and a $50 million transfer out of the reserve fund. We can do it again this year.
The Meridian Star: How much is in the reserve fund now?
Bennett: It went from $260 million three years ago down to $110 million. It's designed to take us through four years of bad economic cycle because you can only move $50 million a year. We're in the third year now. After that, we're going to have to look at something a little more extraordinary. We'll have to restructure the way we handle special funds. I don't think we'll have to face that.
Our state budget is $10.5 billion. We have $3.5 billion in general fund money from sales tax, corporate income tax and individual income tax and we have another $3.5 billion that comes in from federal funds and another $3 billion that comes in from special funds gasoline tax, fees from hunting licenses, tickets from the highway patrol special funds that are dedicated to special purposes.
In North Carolina they unify their system. They dump all their funds into the treasury basket and then appropriate them out rather than diverting revenue to special fund agencies.
The Meridian Star: Can all agencies weather more cuts?
Bennett: Most agencies can take a 5 percent budget cut. Any agency director who can't handle a 3- to 5-percent budget cut better look at themselves because they are paid good money to manage that department, even with 3 percent less money.
I'd say quit your belly-aching and get on with it. That's what the rest of us are doing. We just sucked it up and tightened our belt. We quit purchasing computer equipment, we cut travel by about three-fourths, we've cut commodity purchases.
There is money that has to be spent, but if you want to protect personnel as long as you can, you have to cut capital outlay, travel, commodities and contractual expenses. Sure it's painful, but it's not unbearable.
The Meridian Star: What about the Department of Human Services?
Bennett: They have a little more pressure than most folks because they are dealing with children's protective service and foster care dire family problems that have to be taken care of. There's enough money to fund that, but it has to be managed closely in a down-revenue situation. You just can't expect to go on business as usual. If you cut their budget, you cut the 3-to-1 match from the federal government.
The Meridian Star: What will it take to get the economy back in order?
Bennett: It's going OK. The recession is over. The recovery has begun. Vehicle sales are strong, housing is strong, unemployment is still low.
The only segment in the national economy that hasn't recovered is the stock market. People are still wondering how they are going to recover their losses because of corporate fraud, recession and terrorism.
The stock market is still spooked. It is going to be volatile, according to the national economists I talked to, for the next three-to-six months. By the second quarter of next year most economists agreed we will see stable, slow growth.
You will not see double-digit returns out of the stock market for five-to-six years.
The Meridian Star: What is the status of the state retirement system?
Bennett: We lost about $4 million in Enron out of $17 billion in assets. It was not a significant impact on our retirement system. With WorldCom we made $10.5 million in the good years and we lost $5.4 million recently in the bad years. Again, that is a very insignificant amount on the total picture. The state retirement system is still very strong and in very good shape.
The Meridian Star: What are your political plans for 2003?
Bennett: I've been considering, very seriously, running for re-election. I've done this four terms. After I complete this term, I will have served longer than any other treasurer in the state.
The only open seat if the governor and lieutenant governor run for re-election would be attorney general if Mike Moore decides not to run for re-election or to run for something else or to do something else. A lot of folks have said they hoped I would consider running for attorney general. I will consider that, but my plans right now are to seek re-election.