Mississippi is highly dependent upon federal dollars, both for its operating budget and for taxable spending by individuals and businesses. The incoming Trump administration and the new Republican majorities in Congress are preparing to whack those dollars.
The whacks include decimation of the federal workforce and reductions in farm subsidies. President-elect Trump and his new sidekick Elon Musk have promised to “dismantle government bureaucracy” through big, immediate cuts in the federal workforce. The Heritage Foundation’s Project 2025, favored by many in the Trump camp, calls for eliminating a number of farm bill programs including the popular Conservation Reserve Program. The Mississippi Farm Bureau has been in Washington warning that without an expanded farm bill plus disaster relief, “we fear widespread bankruptcies and an overall economic disaster in the Mississippi farming community, which would have devastating effects on many of our rural communities across the state.” Surely, Mississippi leaders will pause future tax cuts until the impact of these and other federal cuts on state revenues can be assessed. Uh, no.
And the Joint Legislative Budget Committee just adopted a preliminary state revenue estimate for fiscal year 2026 that plans for a $26.9 million increase to $7.627 billion.
Hmmm. Seems like something’s gotta give with major reductions in federal spending posing a double whammy for state revenues.
Whammy 1: Mississippi ranks as the fourth most dependent state on federal funds with more than 40% of its overall budget coming from federal sources. That amounted this year to $13.2 billion spread across 38 state agencies.
Major cuts will put pressure on state funds to make up shortfalls and/or result in staff reductions. Program cuts and staff reductions will impact taxable spending by businesses and individuals dependent upon those expenditures.
Whammy 2: Another $22 billion comes into the state outside of the state budget from federal payments and subsidies. This also generates significant taxable income and spending for thousands of residents.
There are over 27,000 federal employees in Mississippi with annual wages totaling over $2.3 billion. Thousands more employees have incomes dependent upon $4 billion in defense contracts, $1.9 billion in agriculture payments and subsidies, and billions more in other grants, contracts, and subsidies.
There are thousands more who depend upon $13.9 billion in Social Security payments and $1.9 billion in payments to veterans.
Then, there are those of us who depend on our state leaders to make prudent fiscal decisions.
“The prudent give thought to their steps” – Proverbs 14:15.
Crawford is the author of A Republican’s Lament: Mississippi Needs Good Government Conservatives.
9 comments:
Mr. Crawford tends to parrot democrat talking points.
1.The major Federal funds in the state budget are Medicaid, fed gas tax, and military. I really don’t see these suffering major cuts.
2. Major federal funds outside of the state budget of social security, veterans benefits and other defense spending will suffer no cuts.
If federal spending in the state pays for studying the effects of cocaine on the sex drive in rats, I expect it to be eliminated.
MS should adopt a BTC reserve fund. Other states/sovereigns are already on the move, but we could still be relatively early if we took action this session. Next year will be much later and adoption is likely to cost significantly more.
Trump's plans are spot on. Mississippi, live within your means! Oh wait, you want to eliminate the state income tax? How would that work out? Fools.
Crawford must believe that federal dollars grow on trees in WDC.
I am interested in understanding how a BTC reserve fund is going to address the issue at hand. The bottom line is government at all levels is going to have to shrink! The government needs to get back to its original purpose. It has lost its way.
Oh yes, and a lot of those who depend on their job , have no idea that federal money is contributing to their work existing at all or that like with law enforcement and emergency services, federal money is what finances it. Here, 40% of the budget is federal dollars. And ,we are 4th in the nation in highest number of government jobs. One of the other "taken over" red states is about to lose 20% of their workforce and probably more as the most qualified are quickly moving to other states. Having Musk et. al. cut expenses is like Bubba cutting a hospital budget. You got to know what jobs you are cutting and what incomes and taxes those jobs contribute. Government aint' a widget factory!
If people are relying on farm subsidies in order to avoid bankruptcy, they need to enroll in some classes at Moorhead JC and seek another occupation.
9:15, you are correct it does not solve this problem (perhaps it works on some other problems), but my comment on the financial post was just a shameless plug for the idea in hopes someone will not want MS to be the last mover *again*.
Medicaid! Really!? With Dr. Oz set to head CMS, there’s no way Medicaid will no suffer drastic cuts!
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