Mississippi’s experience is like that of other states: Our savings umbrella could have (and maybe should have) been larger, which would have more significantly reduced and/or eliminated the need for cuts in priority programs.
Because we statutorily cap our rainy day fund at 7.5 percent of spending, though, we didn’t have enough money to completely offset revenue shortfalls.
In fact, the idea of saving more – not less – is already underway. Standard & Poor’s and Moody’s gives top scores to states with savings equal to or greater than 8 to 10 percent of annual revenue or spending. The Government Finance Officers Association suggests balances of up to two months’ worth of operating revenue, and the National Conference on State Legislatures recently opined that the five-percent rule (setting aside five percent of revenue) is no longer a universally applicable safeguard measure.
While revenues appear to be on the rise, those who control the purse strings must consider lessons learned from leaner times. I applaud the Republican leadership for their political courage in this regard.
When certain Democrats decry saving, saying we ought to “spend, spend, spend,” Republicans need only to remind them of yesteryear when we were able to avoid larger cuts to programs by using reserve funds.