Local Billion Dollar Project in Jeopardy
Special Session Imminent
For the first time since the Reagan Administration, Mississippi lawmakers ended the legislative session without a bond bill, leaving millions of dollars on the table and countless state entities scrambling for funds.
From the Institutions of Higher Learning (IHL) to the Mississippi Development Authority (MDA), budgets all over the state are being forced to make drastic cuts. The economic and financial implications could be far greater for Mississippi taxpayers.
The controversy surrounding the state’s failed bond bill began back in February when a bond bill totaling $260,500,000 came out of the Ways and Means Committee and onto the House of Representatives floor. When the bill was on the floor, Rep. Robert Johnson added another $20,000,000, making the bill a proposed $280,500,000. The bill – titled HB 1631 – passed the house and was then sent to the senate for approval.
According the Rep. Jeff Smith, who also serves as the Ways and Means chairman, the house wanted to keep the amount of the 2013 bond bill below the amount of debt that was being paid off. The amount of bonds being paid off for the 2012 session totaled to $284,035,000.
Traditionally, both the house and the senate will create a bond bill. After each side passes their version of the bill, it is exchanged across the capitol, meaning the house sends their version to the senate and the senate sends their version to the house.
However, in the 2012 legislative session, the senate failed to create a bond bill. Led by Lt. Gov. Tate Reeves, the senate held a firm stance that they would not be creating or approving a bond bill.
When the senate received HB 1631, they did a “reverse repealer”, meaning they approved the bill on its merits and sent it back to the house.
In years past if either the senate or the house did a reverse repealer on a bill, it signified to the other side that they were ready to hold a conference, or meet and discuss the bill.
In order to hold a conference, both the senate and the house have three representatives present. These representatives are referred to as “conferees”.
Typically, the chairman of Ways and Means is one of the three conferees for the house. The chairman’s counterpart in the senate, the finance chair, is one of the three conferees for the senate. Both the chairman and the finance chair then each appoint two fellow conferees, and the six-member committee takes the bill and starts from scratch with the same general ideas and principals. In years past this has always resulted in a compromise of the house wants and the senate demands and vice versa.
Chairman Smith states that he tried “numerous times” to get in touch with Senate Finance Chair Joey Fillingane, but Fillingane always responded that he “had no authority.”
HB 1631 was passed in February, and Smith stresses that he repeatedly tried to contact Fillingane through the remaining two months of the session to little or no avail. No conferees were ever named, and Smith and Fillingane never officially met to discuss the bond bill.
While the senate ultimately failed to pass the bill, the debate over the amount of the bond seemed to occur within party lines, between Republicans, House Speaker Phillip Gunn and the Speaker of the Senate, Lt. Gov. Tate Reeves.
Known for his frugality, Reeves served two terms as the state treasurer and based his campaign for lieutenant governor on his financially conservative record. Reeves ran against opponent Billy Hewes on the platform that he would not issue any bonds. However, according to multiple sources in Jackson, Reeves is quickly becoming known for his unwavering political stance, with Democrats and Republicans alike beginning to refer to him as “Hitler.”
Furthermore, a look at Reeves’ record during his eight years as treasurer shows that he may be partially responsible for Mississippi’s $4 billion of bond debt.
Mississippi has $4,148,110,000 in bond debt. Of that $4.1 billion debt, $3,438,045,000 was issued by the bond commission from 2004 to 2012. In order for a bond to be passed, it has to be approved by The Mississippi Bond Commission. The Mississippi Bond Commission is made up of the governor, state treasurer and attorney general. Reeves was elected to the office of treasurer in 2003 and served on the commission until his election as lieutenant governor in Nov. 2011. During the lieutenant governor’s election, Reeves criticized Hewes for his role in the bond debt. However, without Reeves’ approval on the bond commission, those bonds would not have been approved.
Sources within the capitol say that Reeves has quickly forgotten his involvement in the bond debt and is asserting his dominance in both the senate and the house. According to those sources, Reeves was adamant that the senate would not pass a bond bill and used the state’s potential redistricting plan as a way to ensure that senate members did not create a bond bill.
According to politicians on both sides of the capitol, elected officials were nervous that if the senate approved a redistricting plan, district lines would be redrawn and senate members would have to face each other in an election, inevitably leaving some of them without a job. Jackson insiders claim Reeves used senators’ fears to his advantage, using potential redistricting as a way to ensure he got the votes he wanted. And now with a failed bond bill for the first time in forty years, elected officials the state over are questioning if Reeves is in over his head.
On Friday, April 27, the day before the conference reports were due, Reeves asked Speaker Gunn to meet and work out the details of the bond bill. In the history of Mississippi politics, that is virtually unheard of. This action further cemented the belief among Jackson insiders that Reeves was out of his depth and not aware of the proper protocol. According to Chairman Smith, the lieutenant governor meeting directly with the speaker of the house, essentially cutting out the role of the finance chair, hasn’t happened in Smith’s 21 years in the legislature.
Since dissecting the state’s budgetary needs is typically left up to the Chairman of Ways and Means, Rep. Jeff Smith, and not the speaker of the house, Gunn reportedly told Reeves, “Ask Smith, he knows what we’re looking for.”
When Reeves and Smith met to discuss the bond bill on Friday evening – another first – Smith laid out everything that the house wanted, describing even more than what was in the bill already. Smith gave Reeves a detailed list of projects throughout the state that totaled up to $386 million. Smith states that he did not expect Reeves to agree to all of the projects, he was simply laying out what could have made it onto the $285 million bill but did not.
However, the unconventional meeting between Smith, Gunn, Reeves and Fillingane resulted in confusion among both house and senate members, with many believing that the house had formally increased the amount of the bond bill. House Representative Gary Chism, who voted “yes” on the $285 million dollar bond bill in February, incorrectly stated the house passed a $400 million bill, saying “We (the house) went to them with a $400 million bill. They (the senate) went from zero to acknowledging there would even be one.” Smith adamantly states that the amount of the bill never went above the original $285 million.
While Reeves did not provide Smith with a list of his demands during the meeting, or at any point thereafter, he did verbally express his plan for the state’s budget. According to Smith, Reeves reportedly told the chairman “I don’t feel like doing a bond bill” and was only willing to agree to a $100 million bond bill to be paid by the state.
Of the $100 million, Reeves reportedly estimated $51 to $58 million would go to IHL and $10 million to $13 million would go to MDA. However, the remaining $29 million to $39 million dollars would not be enough for repairs and reconstruction across the state, which meant any needed money would have to come from the general fund. To solve that problem, Reeves concocted a plan to add what he estimated to be $56 million to the general fund.
Reeves allegedly claims the $56 million will come from a “growth fund,” a fund that does not yet exist but that he believes will come to fruition once the economy begins to improve. Reeves reportedly feels this way based on an equation that he created. According to Mississippi economists, the state economy will grow at 2.9 percent a year. Reeves, however, reportedly disagrees and believes that the economy will grow at a rate of 4.5 percent. The $56 million comes from the extra 1.6 percent. However, as the economy has yet to grow as fast as Reeves projected, the $56 million has yet to be collected.
Smith said the Friday evening meeting adjourned at 5:35 p.m., 65 minutes after it started. Typically, a conference lasts at least a week. The two did not make plans to meet again.
On Saturday morning Speaker Gunn sent a letter to Reeves stating that if a bond bill was going to happen, the two needed to begin working on it immediately. In that letter, Gunn informed Reeves that the house held a firm position on a $249,850,000 bond bill. Gunn reportedly did not hear back from Reeves until two hours before the deadline that afternoon, when Reeves called Gunn and told him that any further negotiation would only happen if it occurred exclusively between the lieutenant governor and the speaker; the Ways and Means Chairman would not be included, an unprecedented happening in Mississippi politics.
At that meeting, Reeves’ version of the bond bill only contained $123 million worth of allotments, $33 million less than it had the day before. Of that $123 million, $50 million was supposed to come from Reeves’ yet to be created “growth fund”. If the $50 million never comes to fruition, the bond bill would be $73 million dollars.
Gunn reportedly told Reeves that the number wouldn’t meet all of the state’s needs. He then informed the lieutenant governor that the house’s position on the bond bill was a firm $250 million to which Reeves replied, “Let’s sit down and hammer it out.” Gunn pointed out that there was literally only an hour left before the conference deadline, not enough to type the 80-page bill, much less sit down and discuss it. Reeves allegedly replied, “What’s the clock between friends?”
The deadline for the bond bill came and went and Mississippi ended the 2012 legislative session without a bond bill.
While Republicans across the state are declaring the legislative session a “win” for conservatives, Chairman Smith expressed frustration at the failed bond bill. Smith said that little headway was made during their Friday evening meeting and ended with Smith finally telling Reeves, “I can’t see passing a $100 million bond bill when our needs are so much greater.”
According to Smith, those needs include, but are not limited to, $104 million to IHL, $31 million to MDA and $31 million to build a new medical center in Jackson.
The $104 million to IHL was hoped to be a revolutionary program that would give the eight colleges in Mississippi a chance to plan for the future and not work on their current year-to-year basis. The $104 million per year was to be split up among the eight colleges for the next four years. Without a bond bill, college campuses across the state are left in a state of limbo, and future projects uncertain.
According to Mississippi University for Women President Dr. Jim Borsig, “Every day’s delay pushes the project further out into the future. (The money from the bond bill) provides us with some certainty. It makes a lot more sense.”
In addition to contributing to IHL, the University of Mississippi Medical Center is in desperate need of funding. Some buildings on the campus were constructed in 1954 and the class of 2013 is sitting in the same classrooms as the charter class did nearly 60 years ago. Part of the medical program’s accreditation depends on the facility being up to date. As the only academic health science center in the state, Smith stressed the importance of funding the school before it is a necessity. “We would like to be proactive instead of reactive,” he said.
Arguably, the program that is taking the biggest hit is MDA. The development authority is responsible for bringing all major industry into Mississippi and depends on heavily on bonds issued by the legislature. If MDA does not receive the needed funding, all potential projects could hang in the balance. For example, a new steel mill is set to be built in Clay County by industrial giant John Correnti. Correnti is responsible for bringing Severcorr to the Golden Triangle, and, in a domino effect, other industries followed, such as Paccar, Stark Aerospace and American Eurocopter. Correnti’s new reportedly billion-dollar project partially depends on the financial backing from MDA. While the governor can call a special session to ensure that Correnti gets the financial support he needs, special sessions cost the taxpayers $75 per day plus mileage per house and senate member. With 122 members in the house and 52 in the senate, taxpayers are being charged $13,050 in salaries per day to fund a project that could have been taken care of during regular session. In addition, the secondary expenses of operating the capitol during a special session will raise the total to an estimated $40,000 a day.
President Pro Tempore and close friend of Correnti, Sen. Terry Brown, confirmed the rumored steel mill but claimed going into special session is unavoidable.
“We would have never given MDA enough money,” Brown said. “We’ll always go into special session. MDA didn’t have a big pile of money. You go into special session every time.” He also added that while MDA did not get the money they needed, he believes the Mississippi economy will continue to grow, with or without a bond bill.
“I can assure you of this. Construction will never stop in this state because we didn’t issue a bond bill,” he said.
Brown, who was appointed President Pro Tempore by Reeves, defended the lieutenant governor’s decision to not have a bond bill.
“The problem is, we’ve gotten our debt service in a serious situation,” Brown said. “Lt. Gov. Reeves put the finger on me to be the pro tempore and his top priority is to get [the debt] down.”
Brown also criticized the house for their role in the bond bill: “The House chose not to negotiate, a conference was never initiated. The bottom line is this. They came to us with 280 (million). We reverse repealed it. Normally, that shows the house we’re ready to go to conference. But 400 or more? We’ll just settle with none.”
While Reeves and Brown both used Mississippi’s bond debt as reasoning behind the lack of bond bill, Mississippi has a stellar bond rating. Rated at “AA”, Mississippi holds the same rating as the United States. Additionally, Mississippi’s debt, which is governed by Section 115 of Mississippi’s Constitution of 1890, is only at 33 percent of its debt ceiling, down from 38 percent in 2004.
In order for the Mississippi Legislature to convene outside of regular session, Governor Phil Bryant must order a special session. As of press time Wednesday evening, there were no set plans for special session to discuss the bond bill or the proposed steel mill.0