*First appeared in the May 7 edition of the Laurel Chronicle
“Every small business is one lawsuit away from bankruptcy,” proclaimed then-gubernatorial candidate Haley Barbour on the 2003 campaign trail. Promising “more and better jobs” by eliminating Mississippi’s position as a judicial hellhole, Barbour’s message of tort reform resonated with voters.
In 2003, I of course had no idea what a tort was. A dessert, maybe? It sounded delicious. Desserts weren’t often in need of “reform,” so I did some digging. Here’s what I found.
Jackpot justice had developed a niche in Mississippi. Our legal climate was scaring off potential employers and threatening the livelihood of existing businesses. As more lawsuits were filed, fewer doctors stayed in the state. Medical facilities were shuttering their doors due to rising insurance costs. In the Delta, one hospital even closed its emergency room because the county government couldn’t pay its medical liability bills.
Frivolous lawsuits had given Mississippi’s economic and healthcare climate a black-eye at a time when the state could least afford it. In 2003, the state was in debt, and jobs were being lost at an alarming pace. Without aggressive action to reform the state’s civil justice laws, Mississippi’s future hung in the balance.
These were the high stakes of the governor’s race in 2003, so in looking back it’s easy to understand why voters were passionate about the issue. Gov. Barbour kept his promise and successfully convinced the Legislature to pass what the Wall Street Journal called “the most comprehensive tort reform law in the nation.”
This year marks the ten-year anniversary of the Tort Reform Law of 2004, which is probably a good time for all you non-attorneys to ask: What does tort reform really have to do with me?
I’ve hinted at the broader implications of lawsuit abuse. Of particular interest to Mississippians, especially in the days of Obamacare, is the impact of lawsuit abuse on our healthcare system. Without appropriate laws in place, doctors and hospitals couldn’t afford to stay in Mississippi. Former state senator Neely Carlton told a group Monday that, prior to tort reform’s passage, more than 500 Mississippi doctors had let their licenses expire in one year and that at least seven Mississippi counties didn’t have a single OB/GYN.
After the new laws were passed, however, insurance rates dropped, new insurance companies entered the market, and the largest health insurance writer in the state began writing new policies. The comprehensive tort reform law ended the healthcare crisis caused by lawsuit abuse.
In a post-recession environment where job growth still lags, the economic impact of civil justice reform can’t be overlooked. Prior to tort reform, the U.S. Chamber of Commerce ranked Mississippi 50th for its unfair legal climate several years in a row. Businesses not only had to weigh the impact of the “lawsuit abuse tax” (costs of hiring lawyers to defend against frivolous lawsuits), they also had to factor in the nuisance value of settling out of court with people filing these lawsuits.
Mississippians for Economic Progress previously estimated that lawsuit abuse had cost Mississippi about 10,000 jobs and another $1,000 per household in economic impact.
Tort reform stopped the hemorrhaging. Businesses begin to view Mississippi as a viable place to do business. Toyota, which has created thousands of jobs in northeast Mississippi, said it would not have considered locating in Mississippi without tort reform. Other major companies have located or expanded operations here in Mississippi. (GE Aviation expanded operations to include a plant in Ellisville. I’m not saying tort reform was the primary cause, but it certainly didn’t hurt.)
Legal issues remain hugely important to job creation. The 2013 Global Manufacturing Competitiveness Index, a collaboration between Deloitte and the U.S. Council on Competitiveness, studied more than 550 CEOs and senior manufacturing leaders. They found that legal and regulatory concerns were the fifth highest drivers of competitiveness, outranking other factors such as physical infrastructure, energy costs, or even government investment.
Mississippi has enjoyed a pro-growth, business friendly legal environment since the passage of tort reform. Leaders would be unwise to deviate from the proven results of these laws.
But don’t take my word for it. Actual experts on the issue will gather in Jackson to commemorate the ten-year anniversary of the law during the “Mississippi Tort Reform: Ten Years After” conference on May 14. The conference will highlight successes of the law, as well as future risks. Anyone interested in attending the event can register online – simply google the name of the event or visit the Mississippi Economic Council’s website and look under “What’s Happening” (www.msmec.com).
"MISSISSIPPI TORT REFORM: TEN YEARS AFTER" - FREE TO ATTEND. REGISTER HERE.
Showing posts with label Mississippi Economy. Show all posts
Showing posts with label Mississippi Economy. Show all posts
Wednesday, May 7, 2014
Thursday, June 27, 2013
Budget surplus: Old “problem” in new economy
*First appeared in the Laurel Chronicle on June 27, 2013
About the same time the economy collapsed, I began working in earnest on the state’s budget as part of Gov. Barbour’s budget policy team. (Note: There was no correlation between my working on the budget & dwindling tax revenues.)
In 2007, Mississippi’s fiscal situation was beginning to crumble: After enjoying years of healthy revenue growth, Mississippi’s collections tanked alongside the rest of the states’.
To get a sense of the impending financial doom, read from Gov. Barbour’s executive budget recommendation for Fiscal Year 2009: “We have to recognize the national economy has been softening. Serious troubles in the financial markets have not only generated pessimism but also have caused a real credit crunch…This will require considerable budget discipline. It means we’ll have to tell some people ‘No;’ it means some good things won’t get funded or won’t get as much funding as some people would like.”
The week before the FY 2009 budget recommendation was published, the front page of the Wall Street Journal had proclaimed, “States prepare to tighten belts as growth in revenue slows.” And the State Economist at the time warned lawmakers that sales tax receipts for July through December 2007 (the first half of the FY 2008 fiscal year) had increased only one-tenth of one percent.
For comparison purposes, consider the following: Gov. Barbour had proposed to increase spending in FY 2008 (the year before the downturn) by 7.5 percent; in FY 2009, he proposed a cautionary 0.4 percent increase.
Although the Legislature and Governor approved a modest budget to prepare for the downturn, it wasn’t enough. Lower-than-expected revenues forced Gov. Barbour to trim spending by $200 million in FY 2009. The sluggish economy required the Governor to cut the following year’s budget five times, or a reduction of $466 million in FY 2010.
Since that time, budgetary caution has been the name of the spending game…until now, perhaps. Earlier this month, we learned the state was on its way to a budget surplus for the current fiscal year, which ends this weekend (June 30). The House Appropriations chairman told another newspaper the surplus would likely be a “substantial” amount around $300 million.
As a friend of mine would say, that’s a lot of skrilla (translation: money).
Just think – Gov. Barbour’s first round of cuts in FY 2010 was roughly $171.9 million. Fast-forward to FY 2013 when the state’s tax collections for May exceeded the estimate by the same amount.
We must remember that for the last five or so years, lawmakers have rightly weighed spending against anemic revenue growth to determine budgeting priorities. A budget surplus? Well, that’s a new one on the current class at the State Capitol.
Already, groups are laying claim to the money. The Parents’ Campaign, which lobbies for education funding, sent an email blast to its members asking them to contact their legislators: “Ask them to commit to using the surplus to fully fund the MAEP before it is spent on other things.” (MAEP is the formula used to determine how much money goes to schools.)
At their annual meeting two weeks ago, Mississippi supervisors talked about the need to find additional money for programs like healthcare implementation and homestead exemption. There’s a legislative task force aimed at finding additional revenue for our state’s highway infrastructure. No one can ignore the rising costs of programs like Medicaid and the state retirement system, both of which will gobble up additional revenue.
For a few years, the Capitol-types (lobbyists, state agencies, etc.) recognized they simply weren’t going to get as much money as they wanted – if they got any at all. Policymakers were open to considering cost-cutting reform measures because they had to be. Now, with a budget surplus on the horizon, that mindset will likely vanish. Legislators, especially those on the money committees, can expect a little extra attention during the coming session.
Legislators can use the surplus in three ways: 1) increase funding for priority areas, like education; 2) reduce taxes to spur growth; and 3) set aside money for a “rainy day.” A likely scenario includes some combination of these options.
Until a final budget is adopted, legislators should be prepared for an onslaught of new spending options. Emboldened by a revenue surplus, state agencies and lobbyists will fight tooth and nail for a larger piece of the budgetary pie. While some of the longer-serving lawmakers remember the pre-recessionary days when revenue wasn’t as tight, a large part of the current class isn’t used to this much money – or the pressures that come with it.
It’s an old problem, for sure, but the reality is that Mississippi isn’t in the clear yet. While our revenues may be higher than expected, our economic picture is still slow to brighten. According to the latest stats, the state’s unemployment rate was tied for the second-highest in the nation with close to 120,000 Mississippians unemployed. Getting people back to work will take time, and revenues won’t fully catch back up until the employment situation bounces back.
About the same time the economy collapsed, I began working in earnest on the state’s budget as part of Gov. Barbour’s budget policy team. (Note: There was no correlation between my working on the budget & dwindling tax revenues.)
In 2007, Mississippi’s fiscal situation was beginning to crumble: After enjoying years of healthy revenue growth, Mississippi’s collections tanked alongside the rest of the states’.
To get a sense of the impending financial doom, read from Gov. Barbour’s executive budget recommendation for Fiscal Year 2009: “We have to recognize the national economy has been softening. Serious troubles in the financial markets have not only generated pessimism but also have caused a real credit crunch…This will require considerable budget discipline. It means we’ll have to tell some people ‘No;’ it means some good things won’t get funded or won’t get as much funding as some people would like.”
The week before the FY 2009 budget recommendation was published, the front page of the Wall Street Journal had proclaimed, “States prepare to tighten belts as growth in revenue slows.” And the State Economist at the time warned lawmakers that sales tax receipts for July through December 2007 (the first half of the FY 2008 fiscal year) had increased only one-tenth of one percent.
For comparison purposes, consider the following: Gov. Barbour had proposed to increase spending in FY 2008 (the year before the downturn) by 7.5 percent; in FY 2009, he proposed a cautionary 0.4 percent increase.
Although the Legislature and Governor approved a modest budget to prepare for the downturn, it wasn’t enough. Lower-than-expected revenues forced Gov. Barbour to trim spending by $200 million in FY 2009. The sluggish economy required the Governor to cut the following year’s budget five times, or a reduction of $466 million in FY 2010.
Since that time, budgetary caution has been the name of the spending game…until now, perhaps. Earlier this month, we learned the state was on its way to a budget surplus for the current fiscal year, which ends this weekend (June 30). The House Appropriations chairman told another newspaper the surplus would likely be a “substantial” amount around $300 million.
As a friend of mine would say, that’s a lot of skrilla (translation: money).
Just think – Gov. Barbour’s first round of cuts in FY 2010 was roughly $171.9 million. Fast-forward to FY 2013 when the state’s tax collections for May exceeded the estimate by the same amount.
We must remember that for the last five or so years, lawmakers have rightly weighed spending against anemic revenue growth to determine budgeting priorities. A budget surplus? Well, that’s a new one on the current class at the State Capitol.
Already, groups are laying claim to the money. The Parents’ Campaign, which lobbies for education funding, sent an email blast to its members asking them to contact their legislators: “Ask them to commit to using the surplus to fully fund the MAEP before it is spent on other things.” (MAEP is the formula used to determine how much money goes to schools.)
At their annual meeting two weeks ago, Mississippi supervisors talked about the need to find additional money for programs like healthcare implementation and homestead exemption. There’s a legislative task force aimed at finding additional revenue for our state’s highway infrastructure. No one can ignore the rising costs of programs like Medicaid and the state retirement system, both of which will gobble up additional revenue.
For a few years, the Capitol-types (lobbyists, state agencies, etc.) recognized they simply weren’t going to get as much money as they wanted – if they got any at all. Policymakers were open to considering cost-cutting reform measures because they had to be. Now, with a budget surplus on the horizon, that mindset will likely vanish. Legislators, especially those on the money committees, can expect a little extra attention during the coming session.
Legislators can use the surplus in three ways: 1) increase funding for priority areas, like education; 2) reduce taxes to spur growth; and 3) set aside money for a “rainy day.” A likely scenario includes some combination of these options.
Until a final budget is adopted, legislators should be prepared for an onslaught of new spending options. Emboldened by a revenue surplus, state agencies and lobbyists will fight tooth and nail for a larger piece of the budgetary pie. While some of the longer-serving lawmakers remember the pre-recessionary days when revenue wasn’t as tight, a large part of the current class isn’t used to this much money – or the pressures that come with it.
It’s an old problem, for sure, but the reality is that Mississippi isn’t in the clear yet. While our revenues may be higher than expected, our economic picture is still slow to brighten. According to the latest stats, the state’s unemployment rate was tied for the second-highest in the nation with close to 120,000 Mississippians unemployed. Getting people back to work will take time, and revenues won’t fully catch back up until the employment situation bounces back.
Friday, June 7, 2013
Teen pregnancy rates dip, but out-of-wedlock births lead to larger economic challenges
*First appeared in the Laurel Chronicle on June 6, 2013.
About two weeks ago, the Centers for Disease Control released another of its reports full of charts, numbers, and phrases like “data sources and methodology.” Got your attention? I didn’t think so, but stay with me.
This CDC report (“Declines in State Teen Birth Rates by Race and Hispanic Origin”) focused on teenage pregnancy, a topic all-too-familiar in this state. But the findings aren’t what you might think: Nationally, teenage births have seen a dramatic decline, with Mississippi following the trend. Over the five-year period (2007-2011), Mississippi’s teenage birth rate dropped from a whopping 70 percent (wow!) to 50 percent, or a decline of 28 percent. While 50 percent is still too high, the downward trend is encouraging. That’s the good news.
Although the 2011 data hasn’t been released yet, I thought it prudent to check on the trend of another measure: nonmarital, or out-of-wedlock, births. Over the past five years of available CDC data (2006-2010), out-of-wedlock births in this state have risen slightly, with more than one-half (54.8 percent) of all births falling in this category. That’s the bad news.
Why? Because the shift in the American family structure – specifically, the increase in out-of-wedlock births – has a dramatic and lasting impact on our economic growth. While I am most interested in monetary issues, I have come to realize it’s impossible (and impractical) to isolate economic policies from the over-arching issue of family structure. The two are inevitably linked. To put it simply: Families matter.
Illegitimacy typically leads to negative outcomes for both mother and child. This isn’t my opinion; it’s backed up by recent stats from the U.S. Census Bureau (yes, another government report). Out-of-wedlock births have increased since the 1940s, with dramatic upticks seen in recent years. According to the Census Bureau’s “Social and Economic Characteristics of Currently Unmarried Women with a Recent Birth,” individuals who have children outside of marriage are generally younger, have less education, and have lower income levels than married parents. Children born out of wedlock are more likely to be poor; even those kids who live in co-habiting households (where the mom and dad live together but are not married) have negative developmental and behavioral outcomes “due in part to family instability.”
In Mississippi, the out-of-wedlock birth rate is 54.8 percent according to the CDC. Broken down by race, we see that rate at 32.3 percent for whites; 56 percent for Hispanics; and 81.4 percent for blacks. Consider the known outcome of illegitimacy on poverty, income, and educational attainment. The African-American community is particularly hard hit.
Interestingly, the Census Bureau report notes that states with higher illegitimacy rates have, on average, correspondingly low levels of economic success: Lagging median incomes; elevated drop-out rates; low levels of higher educational attainment; and high levels of poverty. Mississippi checks the box in virtually every category.
Other considerations I’ve not mentioned include crime rates, which are closely linked to child rearing, and workforce development, including the readiness of an individual to join the workplace. Believe it or not, many employers today have problems finding workers with so-called “soft skills” – such as knowing what to wear in a work environment or punctuality. It makes sense, though, as these skills have traditionally been taught in the home setting.
So what do we do about it? First, we recognize we cannot legislate our way out of this complex problem. Lawmakers can pass laws that target dropout prevention; they can increase access to contraception or, contrarily, heavily regulate abortion clinics. Taxpayer funds can be used to teach “soft skills” to a modern labor force or to help impoverished communities attract economic development projects.
Given my background as a government policy wonk, I support innovative implementation of most of these ideas. But government is limited in that it can only target symptoms of a greater problem: A dramatically shifting American family structure.
Just as the problem of out-of-wedlock births begins in our communities, so should our response. Churches, civic groups, community organizations, parent-teacher associations, and others should take action. They should proactively target those within their reach, whether it’s high school students or a church youth group. Parents-to-be should be encouraged by their neighbors; honest dialogue should occur between friends who are considering marriage (or not). A special look should be given to those communities who are suffering most – such as the 80 percent of black children born outside of a marriage.
After all, when we fail to take personal responsibility, we fail as a community. In this failure, we create a void that is often filled by a government ill-equipped to impact real change. At the very least, we know the government will embrace its role as societal fixer – but usually through bureaucratic largesse that leads to increased spending and higher taxes…which brings us right back to economics, like I said.
About two weeks ago, the Centers for Disease Control released another of its reports full of charts, numbers, and phrases like “data sources and methodology.” Got your attention? I didn’t think so, but stay with me.
This CDC report (“Declines in State Teen Birth Rates by Race and Hispanic Origin”) focused on teenage pregnancy, a topic all-too-familiar in this state. But the findings aren’t what you might think: Nationally, teenage births have seen a dramatic decline, with Mississippi following the trend. Over the five-year period (2007-2011), Mississippi’s teenage birth rate dropped from a whopping 70 percent (wow!) to 50 percent, or a decline of 28 percent. While 50 percent is still too high, the downward trend is encouraging. That’s the good news.
Although the 2011 data hasn’t been released yet, I thought it prudent to check on the trend of another measure: nonmarital, or out-of-wedlock, births. Over the past five years of available CDC data (2006-2010), out-of-wedlock births in this state have risen slightly, with more than one-half (54.8 percent) of all births falling in this category. That’s the bad news.
Why? Because the shift in the American family structure – specifically, the increase in out-of-wedlock births – has a dramatic and lasting impact on our economic growth. While I am most interested in monetary issues, I have come to realize it’s impossible (and impractical) to isolate economic policies from the over-arching issue of family structure. The two are inevitably linked. To put it simply: Families matter.
Illegitimacy typically leads to negative outcomes for both mother and child. This isn’t my opinion; it’s backed up by recent stats from the U.S. Census Bureau (yes, another government report). Out-of-wedlock births have increased since the 1940s, with dramatic upticks seen in recent years. According to the Census Bureau’s “Social and Economic Characteristics of Currently Unmarried Women with a Recent Birth,” individuals who have children outside of marriage are generally younger, have less education, and have lower income levels than married parents. Children born out of wedlock are more likely to be poor; even those kids who live in co-habiting households (where the mom and dad live together but are not married) have negative developmental and behavioral outcomes “due in part to family instability.”
In Mississippi, the out-of-wedlock birth rate is 54.8 percent according to the CDC. Broken down by race, we see that rate at 32.3 percent for whites; 56 percent for Hispanics; and 81.4 percent for blacks. Consider the known outcome of illegitimacy on poverty, income, and educational attainment. The African-American community is particularly hard hit.
Interestingly, the Census Bureau report notes that states with higher illegitimacy rates have, on average, correspondingly low levels of economic success: Lagging median incomes; elevated drop-out rates; low levels of higher educational attainment; and high levels of poverty. Mississippi checks the box in virtually every category.
Other considerations I’ve not mentioned include crime rates, which are closely linked to child rearing, and workforce development, including the readiness of an individual to join the workplace. Believe it or not, many employers today have problems finding workers with so-called “soft skills” – such as knowing what to wear in a work environment or punctuality. It makes sense, though, as these skills have traditionally been taught in the home setting.
So what do we do about it? First, we recognize we cannot legislate our way out of this complex problem. Lawmakers can pass laws that target dropout prevention; they can increase access to contraception or, contrarily, heavily regulate abortion clinics. Taxpayer funds can be used to teach “soft skills” to a modern labor force or to help impoverished communities attract economic development projects.
Given my background as a government policy wonk, I support innovative implementation of most of these ideas. But government is limited in that it can only target symptoms of a greater problem: A dramatically shifting American family structure.
Just as the problem of out-of-wedlock births begins in our communities, so should our response. Churches, civic groups, community organizations, parent-teacher associations, and others should take action. They should proactively target those within their reach, whether it’s high school students or a church youth group. Parents-to-be should be encouraged by their neighbors; honest dialogue should occur between friends who are considering marriage (or not). A special look should be given to those communities who are suffering most – such as the 80 percent of black children born outside of a marriage.
After all, when we fail to take personal responsibility, we fail as a community. In this failure, we create a void that is often filled by a government ill-equipped to impact real change. At the very least, we know the government will embrace its role as societal fixer – but usually through bureaucratic largesse that leads to increased spending and higher taxes…which brings us right back to economics, like I said.
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