Gov. Haley Barbour warned lawmakers that tougher economic timesare ahead Tuesday night in his sixth State of the State Address,reiterating his promise for further budget cuts and calling forextreme financial caution while plotting the final six months offiscal year 2009.

Barbour said the current fiscal year faces a budget shortfall of$175-$300 million, and again promised a second round of budget cutsto accompany those made in November.

“In December, after small, manageable declines, Mississippi’srevenues nosedived,” he said.

To deal with the crisis, Barbour has pledged to again allow nobonds to be issued except those that would create jobs, and heincluded the Mississippi Adequate Education Program and Medicaid inhis list of agencies and programs to cut. Both were initiallyshielded from reductions in November.

Perhaps most telling of the state’s financial crunch is the factthat, for the first time, Barbour gave legislators his approval tobegin using the state’s $362 million Rainy Day Fund, which he andother Republicans steadfastly protected in 2008. He urged lawmakersnot to spend more than one-fourth of the fund – approximately $90million – this year, as the fund needs to last at least fouryears.

A Lincoln County lawmaker agreed with the governor.

“For Haley Barbour to say it’s raining, it’s raining,” saidDistrict 92 Rep. Becky Currie, R-Brookhaven. “I’ve never heard himsay for us to do anything but save it. We definitely won’t beputting money back into it for a while.”

Barbour also likely shook many lawmakers during his address whenhe reiterated his support for a hospital tax to pay Medicaid’scontinuing budget shortfall. The hospital tax debate from last yearhas rarely been mentioned in 2009, and many lawmakers’ attentionhas been focused on the forthcoming cigarette tax legislation asMedicaid’s fix, Currie said.

She said Barbour’s reintroduction of the hospital tax is a clearindication that he wants any cigarette tax revenues to go into thestate’s general fund instead of being earmarked for Medicaid.Political moves to that effect may already be under way.

Currie said the Mississippi Hospital Association has sentletters to lawmakers stating its intention to pay half ofMedicaid’s $90 million shortfall – $45 million – by means of ahospital tax.

“I do not know what has happened, but it appears the leadershipin the House has dropped the aspect of paying the Medicaidshortfall with the cigarette tax,” she said. “I have not heard whatthe plans are – the (House) Medicaid committee has not evenmet.”

District 91 Rep. Bob Evans, D-Monticello, said lawmakers are”holding their cards a littler closer to their chests,” this year.He said Democrats would continue to oppose a hospital tax and lobbyfor cigarette tax revenues to be used on Medicaid, despite thehospital association’s agreement to chip in.

Democrats are also opposed to Barbour’s pledge to cut educationspending on any level.

Evans questioned the governor’s statement that the law requireshim to cut all state agencies. He said the law should be changed topreserve MAEP if it is, in fact, true.

“The law was made by people and it can be changed by people,”Evans said. “If that’s what we have to do, that’s what I want todo”

Evans has already voted to use $17 million of Rainy Day Fundmoney this session, joining House Democrats to support a bill thatwould refund that amount to the state’s community colleges to makeup for the governor’s initial budget cuts.

It was here that Barbour’s State of the State Address wasweakest, Evans said. In the speech, Barbour urged lawmakers to fundworkforce education, even calling on them to use $20 million instate funds to shore up the Workforce Enhancement Training Fund ifnecessary.

“Yeah, I agree with that, but he’s the one who cut $17 millionoff that and we had to put it back,” Evans said. “In one hand Iwill have to cut community college funding, but on the other handwe need to put money into workforce training? Give me a break.”

The Democratic response, given by Rep. Bradon Jones, ofPascagoula, to Barbour’s address was basically a complete reversal,calling for full funding of MAEP and Medicaid. Democrats also usedtheir response to propose investing in infrastructure projects likerebuilding roads and bridges statewide, basically anout-of-the-blue spending proposal in a time when state funds areshorter than ever.

Evans said his party’s call to rebuild infrastructure was notreally a policy explanation but more of a political alignment withPresident-elect Barack Obama, who plans to use billions of dollarsto fund similar projects nationwide in an attempt to stimulate theeconomy.

“I think that was the reference more than us coming up with newmegabucks and doing something about infrastructure,” he said.

District 39 Sen. Cindy Hyde-Smith and District 53 Rep. BobbyMoak could not be reached for comment on the address late Tuesdayor early Wednesday.