Special fund, trust fund sweeps not new

Published 12:00 pm Thursday, June 23, 2016

By Sid Salter

Mississippi Attorney General Jim Hood has sounded the political and perhaps judicial alarm over the so-called “Budget Transparency and Simplification Act” and the special fund “sweeps” or “raids” or whatever verb one applies to the fund transfer it purports to authorize.

Hood’s office has issued opinions that lawmakers overstepped their legal authority in some instances in the legislation and has hinted at possible litigation should lawmakers fail to heed his opinions in the matter and “sweep,” or transfer, designated special funds into the state’s general fund to bolster the state’s cash-strapped budget.

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In response, Lt. Gov. Tate Reeves said the Legislature acted responsibly and that Hood’s concern was founded in protecting “off-budget spending” from some of the impacted special funds.

Hood argued that while lawmakers sought to eliminate special funds in the new law, they left the laws creating the special funds on the books which from a legal standpoint blocks transfer of the monies to the general fund.

Hood further argued that trust funds contained in some of the special funds were exempt from transfer to the general fund. But the bill’s author and the chairman of the Senate Appropriations Committee Sen. Buck Clarke, R-Hollandale, spoke to those concerns back in April.

Clarke said some state agencies operated an “underground economy” and that his legislation was designed to permanently move such funds into the general fund debate. Clarke also pointed out that the Legislature had certainly engaged in sweeps, or transfers, of special funds in times of budget duress in the past.

All due respect to Chairman Clarke, but that is an understatement.

The late Jack Gordon of Okolona, one of Clarke’s predecessors as Senate Appropriations Committee chairman, was the undisputed master of the practice of utilizing “one-time” money, special funds, or other “pots of money” as he called it, to cobble together a state budget in times of budget stress.

Gordon, along with the late House Appropriations Committee Charlie Capps, engaged in the practice when Democrats ran the show in the Governor’s Mansion and in the Legislature and also when Republicans began to assume power in both venues. In 2005, lawmakers began meeting the state’s growing Medicaid deficits with one-time money. They used money from the supposedly “inviolate” Health Care Trust Fund (HCTF). As noted by others in the media of late, the Health Care Trust Fund got violated right out of existence.

And if you want a really impeccable source on the legislative history of “sweeping” special funds generally and spending down so-called “trust” funds specifically, there’s no better source than Hood’s political mentor and friend former Mississippi attorney general Mike Moore.

Back when well-meaning public health care policy advocates were trying to pillory Republicans in general and former GOP Gov. Haley Barbour in particular for spending the Health Care Trust Fund, Moore told me in an interview: “It hasn’t mattered who was in office, Republicans, Democrats, Musgrove, Barbour or who was leading the Legislature. It’s the greatest disappointment I’ve had in 20 years that they couldn’t resist spending it all.”

When legislators are confronted with either raising taxes, cutting services or raiding special funds — even ones like the HCTF that the Legislature formally declared “inviolate” — history has shown that regardless of party, lawmakers will choose to raid the special funds. As Mike Moore honestly observed, that isn’t a partisan thing, either.

The rub for legislative leaders is that not all the criticism of the current effort to “sweep” special funds is coming from Democrats like Hood.

Republican statewide elected officials like Insurance Commissioner Mike Chaney and Secretary of State Delbert Hosemann have likewise criticized the measure.

The rub for Hood is that he served for five years on Moore’s staff at the attorney general’s office and succeeded him in 2004. Special fund or nonrecurring fund spending has been a nonstop affair over those years to little or no objection until it was codified in this new 2016 law.

Sid Salter is a syndicated columnist. Contact him at sidsalter@sidsalter.com.