Mississippi leans more heavily on federal revenue

By Sid Salter
Politicians talk earnestly, passionately and with historical flourishes about cutting federal spending.
Here’s the rub – the Congressional Budget Office projects that the federal government will spend $3.602 trillion in Fiscal Year 2014 and collect $3.042 trillion in revenues, which will leave a projected federal budget deficit of some $600 billion. As one might imagine, Democrats and Republicans differ on those numbers.
That projected deficit looms in a country with a national debt hovering just under $17 trillion that already requires an increase of the current federal debt limit of $16.7 trillion.
Balance that with the fact that over the next 75 years, Social Security will owe more than $9 trillion more in benefits than it is projected to collect from workers. Medicare is on fiscal life support and fading fast and the prospects for either program in their present forms past 2025 are dicey at best.
With that background, let’s move to the question of what cutting federal spending really means for Mississippians.
For FY2013, Mississippi adopted a budget of $18.2 billion. But of that state budget, some 46 percent of it was met with federal dollars. Even with that influx of federal dollars, 70 percent of the total Mississippi budget funded public health care, education, highways, agriculture and economic development. Over the last decade, federal revenues as a share of all Mississippi state government revenues increased from just more than 35 percent in 2000 to just less than 53 percent in 2011.
Specifically, federal funds in Mississippi pay for Medicaid, education, social welfare and highways. Federal funding pays the lion’s share of government costs for Mississippi’s $7.5 billion agricultural and forestry production in 2012, which provided 29 percent of all Mississippi jobs and 22 percent of the state’s total income.
For public health care, the role of federal spending is most impactful. Three-fourths or more of Medicaid costs in Mississippi are paid by federal tax dollars. And to give a complete perspective, Mississippi puts less into the federal coffers than it takes out as a state. Mississippi taxpayers receive $2.73 back in federal spending for every dollar in federal taxes paid.
So that brings us back to politicians talking to us about cutting federal spending.
For those who understand the real threats that an unchecked national debt, escalating federal budget deficits and the quagmire of federal entitlements that are “upside down” in terms of their funding mechanisms, the talk is refreshing.
But at the same time, those same politicians owe us more than platitudes about the economic and social impacts of federal spending reductions.
If half of Mississippi’s state government revenue comes from federal transfer payments, how do those politicians plan to finance public health care, education, highways, agriculture and economic development?
Honestly informed of the consequences, are Mississippi taxpayers really willing to step up and assume fiscal responsibility for government services that have been in great measure subsidized by taxpayers in more affluent states like Connecticut?
Regardless how much red, white and blue bunting is wrapped around it, wholesale cuts in federal spending come with both fiscal and human consequences and those consequences will be compounded in poor states like Mississippi.
Sid Salter is a syndicated columnist. Contact him at 601-507-8004 or sidsalter@sidsalter.com.

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