JACKSON (AP) — Mississippi can expect slow economic growth through December 2008, state economist Phil Pepper said Thursday.

His forecast, along with millions of dollars in agency budget deficits, likely will force lawmakers to recommend a conservative spending plan for next fiscal year.

Pepper told members of the Joint Legislative Budget Committee that the anticipated slow growth in Mississippi reflects national and world economic forecasts.

High energy costs and a changing housing market will result in a cooling of consumer spending, which will impact retail sales, Pepper said.

‘‘Mississippi’s economy is not going to do as well as it would have because of recent events in the national and world economy,’’ Pepper said in an interview after his presentation.

However, Pepper said the commodities market and the startup of various industries, including construction of the Toyota manufacturing plant in northeast Mississippi, should provide an economic boost.

The Joint Legislative Budget Committee wrapped up two weeks of budget hearings on Thursday after receiving financial requests from state agencies. The committee will recommend a spending plan to the full House and Senate when the 2008 Legislature convenes in January.

In November, the committee and Gov. Haley Barbour will meet to adopt a projected revenue estimate for fiscal year 2009, which begins next July 1. That estimate is an educated guess about the amount of money the state will have in its budget.

Senate Appropriations Chairman Jack Gordon, D-Okolona, said along with covering deficits, lawmakers next session will have to repay $48 million to the Mississippi Health Care Trust Fund, which is often tapped to plug budget holes. Legislators created the trust fund as a place to put the state’s annual collections from the 1997 settlement of a massive lawsuit against cigarette makers. Lawmakers originally



planned to spend only the earnings, but they have dipped into the principal.

One of the deficit appropriations facing lawmakers is $56 million needed by the Division of Medicaid to keep operating the health care program for the needy until the current budget year ends on June 30.

‘‘This means we’re going to have to be extremely cautious of the revenue estimate for FY09,’’ Gordon said.

State Rep. George Flaggs, D-Vicksburg, said the state Department of Human Services has asked for a deficit appropriation in excess of $30 million. He said the state treasurer’s office and the Supreme Court also want extra money to finish the current budget year.

‘‘It is becoming extremely difficult to run state government without generating revenue,’’ Flaggs said.

Flaggs is a supporter of a proposal that would raise cigarette excise taxes and lower grocery sales tax. In 2006, Barbour vetoed the tax swap legislation and he opposed a similar bill this past legislative session that died in a Senate committee.

Pepper said he’s optimistic that Mississippi will meet its revenue estimate for the current budget year, but the ‘‘economy is growing slower than we anticipated when we made those estimates.’’

Pepper said Hurricane Katrina recovery is still contributing to economic growth. The storm struck Aug. 29, 2005.

‘‘We had expected reconstruction on the Gulf Coast to be further along than it is now,’’ Pepper said. ‘‘The Gulf Coast will be rebuilt and so the impact of that rebuilding will be spread out over a longer period of time.’’



AP-CS-09-27-07 1445EDT