- Associated Press - Monday, June 20, 2016

JACKSON, Miss. (AP) - Mississippi Attorney General Jim Hood says legislative efforts to use one-time cash to plug a budget hole will be at least $128 million short of the amount lawmakers originally thought they would get.

Hood said calculations by his office and the Department of Finance and Administration show lawmakers can’t legally take from various trust funds $72 million that they had counted on. Legislators already acknowledged overestimating revenue by $56 million for the year that starts July 1.

Lawmakers didn’t budget for debt payments and property insurance in the coming year, and they gave Medicaid less than it’s projected to spend this year. Those additional expenses mean the state could face a roughly $250 million deficit, if nothing else changes. That’s about 4 percent of the overall $6.4 billion spending plan.

Legislative leaders have touted Senate Bill 2362, which Republican Gov. Phil Bryant signed into law, as a way to increase legislative scrutiny on agency spending by requiring more money to flow to the state’s main budget, where lawmakers could divert some cash to other priorities. The move is also supposed to wipe out what some Republican lawmakers characterize as an “underground economy” by prohibiting agencies from charging each other for services.

But agency heads have complained that lawmakers were actually imposing back-door budget cuts and say barring transfers creates problems for money that agencies are only holding for some other beneficiary. Four recent Hood opinions say lawmakers can’t take much of that pass-through money as long as it’s legally a trust fund. That advice doesn’t carry weight of law, but it provides legal cover for agencies that follow it.

Hood said lawmakers could return to the Capitol and write a bill that legally takes the money from the trust funds.

Mississippi’s only statewide elected Democrat, Hood accused lawmakers of trying to paper over a budget shortfall created by more than $350 million in business tax relief from 2012 through 2014. Lawmakers passed another $415 million in business and personal tax cuts this year, which mostly won’t take effect until 2018.

“If it was a company, I’d be trying to charge them with securities fraud,” Hood said, saying Republican lawmakers are misrepresenting Mississippi’s finances to cover up the effects of tax cuts.

He also expressed concern about what would happen to the beneficiaries of the fund after 2017 because lawmakers have diverted future revenue to the main pot of the general fund.

Bryant has said he’s working through the implications of the law and didn’t rule out a special session. There’s a looming shortfall of $60 million or more that must be addressed for 2016 if June tax revenues don’t climb sharply. Bryant could have to call a session to tap into rainy day fund revenues for the third time in 2016.

“I’ll take Attorney General Hood’s opinion into consideration and work with the legislative leadership to determine if any adjustments are needed,” Bryant, a Republican, said in a statement. “This should be a collaborative effort in bringing more transparency and accountability to the budget process.”

Lt. Gov. Tate Reeves, though, continued to accuse Hood of trying to protect control over funds administered by his office.

“The attorney general wants to double-dip his spending, ignores the need for taxpayers’ accountability and transparency and has instructed bureaucrats to ignore the law,” Reeves spokeswoman Laura Hipp said.


Follow Jeff Amy at: https://twitter.com/jeffamy . Read his work at https://bigstory.ap.org/author/jeff-amy

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