The tobacco trust fund, eyed by many as a possible lifesaver in Mississippi's current budget crunch, will be $800 million less than what was originally projected.

The state's tobacco trust fund will not reach $4.1 billion. Instead, it will be $3.3 billion because of decreased sales of tobacco products, a state budget office official told lawmakers Tuesday. Income from the investment of the tobacco payments also dropped significantly. On June 30, 2000, the earnings reached $25.2 million. One year later, the earnings were slightly more than $1 million because of the depressed stock market, said Tom Kynerd with the state budget office. Sen. Ron Farris, R-Hattiesburg, a member of the Joint Legislative Budget Committee, was surprised to hear the numbers. Farris said the reduction will affect the amount of dollars the state depended on for future health-care needs. "That's the first time I've heard it, and I intend to get to the bottom of it," he said. Senate Appropriations Chairman Jack Gordon has suggested diverting part of the annual payment this year to cover a $124 million Medicaid shortfall, and Gov. Ronnie Musgrove has proposed diverting funds to invest in Medicaid to draw down more federal dollars. Attorney General Mike Moore, who uses $20 million annually from tobacco payments to fund anti-smoking efforts and other health-care needs, and State Treasurer Marshall Bennett have said the annual tobacco payments would lessen over time. Moore, when reached late Tuesday, said the payments will be in perpetuity. "The numbers could go up or the numbers could go down," Moore said. "It's real hard to predict." Along with a report on the tobacco trust fund, committee members received other news that gave them cause for concern, such as Mississippi's economic outlook and the need for state employee pay raises, on the first day of budget hearings Tuesday. The state's economist, Phil Pepper, told legislators it will take another year or two before Mississippi sheds its diminishing economy even though the nation's economy is expected to "pick up steam" before the end of the year. Pepper said the state experienced four quarters of negative growth in fiscal 2001, which was considered a recession. Also, it has lost nearly 27,000 jobs, or 11 percent of the work force in manufacturing. That mirrored the national economy's troubles in manufacturing. The service industry, which includes hotels and casinos, has taken over manufacturing as the state's leading industry. Pepper said the service sector isn't as susceptible to fluctuations in the national economy. The future of the state's economy provides a backdrop for the Joint Legislative Budget Committee to make its decisions in funding state agencies in 2003. Budget hearings continue through September. Personnel Board Director Hoopy Stringer said legislators need to put money into recruiting and retaining state employees. He said 23 percent of new hires are gone by the end of a fiscal year and two-thirds of the work force can retire in the next five years. "What we're seeing is we're developing a gap in the middle of the work force," Stringer said. He recommended the state fund $47.2 million of a $99 million plan to realign salaries for state workers. Also, state Supreme Court Chief Justice Ed Pittman told lawmakers salaries for circuit and chancery judges should be increased but offered no dollar figure. The Supreme Court is requesting a 3 percent increase or an additional $134,622 to fill three vacant positions and offset state health insurance premium hikes. Lt. Gov. Amy Tuck said lawmakers will look for every dollar available to fund pay raises.

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