Balancing budget primary business objective
By JIM ESTRADA
When the Mississippi Legislature opens the 2010 session in January, it will be faced with many of the same challenges in 2009. Among the items up for consideration that affect South Mississippians will be the state wind pool insurance supplement, the business inventory tax and the extention of the tourism season. Perhaps paramount among the issues to be debated will be the task of balancing the state’s budget.
“The big issue is the budget,” said Rep. Dirk Dedeaux, D-Sellers. According to the federal Bureau of Economic Analysis, Mississippi experienced a 0.2 percent drop in personal income during the third quarter of 2009.
“People are not making as much money, so they have less to spend,” he said. “But the budget is actually going up due to social services with people being out of work.”
For many business owners on the Coast, the cost of insurance continues to be a major concern. The number of people in the wind pool in Mississippi has more than doubled since Hurricane Katrina. The wind pool is an insurance of last resort for those individuals who do not have access to wind insurance.
“The cost of insurance is a big thing,” said Rep. Roger Ishee, R-Gulfport, “especially south of I-10.” Rep. Diane Peranich, D-Pass Christian and Senate President Pro-Tem Billy Hewes III, R-Gulfport serve on the Legislative Budget Committee. Largely due to the perseverance of the two Coast lawmakers, the committee granted approval for an additional $20 million to be earmarked to help lower the cost of wind insurance.
“We were successful in getting the $20 million back in the budget and won’t have to pull from someplace else,” Peranich said.
The battle to balance the state’s budget will require many of the programs to be omitted. However, “the Governor’s proposal to eliminate the $20 million supplement for the wind pool would have a negative impact,” said Sen. David Baria, D-Bay St. Louis. “This is something that I disagree with. The rising cost of insurance not only affects the business owner, but also gives the individual less money that they can spend with a business.”
Rep. Jessica Upshaw, R-Diamondhead, who is on the Insurance Committee, said that she will introduce a bill during the 2010 session that would allow for a tax credit in the event of a catastrophe to individuals who seek higher deductibles in order to lower their cost of insurance. “That is my wind pool suggestion.” Upshaw sees only slight changes being proposed concerning workman’s compensation.
Rep. Stephen Palazzo, R-Biloxi, addressed the wind pool issue as well.
“It would be nice to have a report on how the wind pool is doing and find out what the remaining obstacles are to affordable insurance in South Mississippi. If a request for more money will be made to prop up the wind pool, then someone needs to be able to explain why our rates have not decreased and what is being done to fix the problem. We can’t keep throwing good money away if there is no long-term solution. However, if additional funds are needed, I believe the Legislature will come through for South Mississippi, as we’ve done for the rest of the state.”
Palazzo added, “With the budget woes, we must focus on fiscal restraints. This includes not only the consolidation of the educational entities in our state but we need to seriously look at the public retirement system and begin annual performance reviews of all state agencies. Lawmakers should be good stewards of tax payer dollars, day in and day out, not just during a financial crises.”
Another concern for local businesses is the inventory tax. Though the existence of the inventory tax reduces the bottom line to a company’s profit, Dedeaux expressed certainty that business owners would not receive relief from a reduction of the tax. “They are not going to reduce the inventory tax.”
Baria said that the inventory tax was an important topic for South Mississippi business owners, but added, “We still have to come up with ways to provide income. Our school systems depend on this revenue.”
A proven revenue generator in South Mississippi has long been tourism. Proposed appropriations at the federal level would fund several projects in South Mississippi. Among the projects that would provide stimulus to the local economy are improvements at Gulfport-Biloxi International Airport. This comes on the heels of a recent announcement that AirTran Airways will resume flights at the airport, after pulling out of Gulfport last year. The increased number of flights out of Gulfport-Biloxi International airport provides direct benefits to the South Mississippi tourism industry.
“Tourism is vital to our area,” Baria said. Baria said that a recent trip by more than 20 members of the Mississippi Legislature to various locations on the Gulf Coast to promote the importance of tourism “was well attended and gave us a chance to show what we have to offer. Tourism dollars, money that comes in from tourism, turns over seven times.” Dedeaux agreed that the visit by upstate lawmakers “was well received.”
Peranich said that the Gulf Coast Business Council has long yearned for the extension of the summer tourism season by pushing back the starting date of the school year. “This would not eliminate school days,” said Peranich, “but would comply with the 180 days of school required by law.”
Dedeaux and Peranich addressed some of the projects that are allowing Mississippi to utilize the unique resources that the state has.
“The Infinity Science Center is unlike anything that you have ever seen,” Dedeaux said. “The Huntsville center is more like a museum, while this will be more like the future being promoted interactively.”
The center will be located along the I-10 corridor. “Something like 12 million cars a year past this location on I-10. If we can get only a fraction of those people, we’ll be doing well,” Dedeaux explained.
Peranich, who heads the House Tourism Committee, is pleased with the many projects that are taking place on the Coast, as well as others that are being considered.
“We are looking at a bond bill, in close association with matching grants from MDA,” she said. “MDA has projects proposed from the Tennessee line to the Coast, and from the Louisiana line to Alabama. The bond bill would provide $4 million to Infinity. We would be able to finish Infinity within two years.”
In addition, the bond would provide the funds needed for improvements to the Equestrian Center on County Farm Road in Harrison County that would include $1 million from the state for material to build additional stalls.
The bond would also provide $5 million for the completion of the Ohr-O’Keefe Museum in Biloxi. “We have tired to jump-start tourism,” Peranich said.
Though South Mississippi is not immune from the harsh economic conditions that are creating havoc for much of the nation, better times may be close at hand. According to Peranich, “If we can get the building blocks in place, I believe that the sky is the limit.”