Mississippi debt service payments have increased 33 percent since fiscal 2009
According to an examination of data by Mississippi Matters, appropriations for debt service by the Mississippi Legislature have increased 33 percent since 2009.
In fiscal 2009, lawmakers appropriated more than $289 million to pay for service on the state's debt. For fiscal 2019, lawmakers appropriated $385 million this past session.
According to its annual examination of every state's comprehensive annual financial report, the non-partisan public policy group Truth in Accounting says the Mississippi has $5.8 billion in debt from bonds and $4.2 billion in other liabilities.
Truth in Accounting also says the state owes $5.8 billion in uncovered benefits for the state's direct benefit pension system, the Public Employees' Retirement System of Mississippi or PERS. The state also owes $784 million in unfunded health care costs for retirees.
Debt service is increasing both in real dollars and as a percentage of the state's general fund budget.
In 2000, the annual appropriation for debt service was more than $158 million, or 4.59 percent of the state's $3.45 billion general fund budget. That figure increased in fiscal 2018 to more than $385 million, which was 6.95 percent of the state's $5.55 billion budget.
That debt is certain to climb after the Legislature passed an infrastructure package this summer in a special session that includes $300 million in bonds to repair roads and bridges.
Paying back those debts might be less costlier after outlook upgrades from both of the financial industry's credit rating agencies.
Moody's upgraded Mississippi's outlook from negative to stable on Tuesday, giving the state an Aa2 rating. This means the state will enjoy savings on future borrowing.
The agency said in its release that the upgrade "reflects historically stable revenues and strong financial controls that have led to healthy fund balances and renewed contributions to the rainy day fund, which were supported by conservative fiscal discipline."
In September, Standard and Poor's upgraded Mississippi's outlook from negative to stable as well.
One of the reasons for the outlook upgrades is the recent increase in employer contributions passed by PERS governing board. This decision means taxpayers will be footing a bigger part of retirement for most state and local employees that could add up to more than $100 million for state and local governments annually.
The board voted in June to increase the employer (taxpayer) contribution from 15.75 percent to 17.4 percent. The change will go into effect on July 1, 2019, the start of the next fiscal year. PERS says doing so will ensure the directed benefit pension funded will be fully funded by 2047.