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DELBERT HOSEMANN

Secretary of State
April21, 2016

The Honorable Phil Bryant


Governor for the State of Mississippi
P.O. Box 139
Jackson, MS 39205

Dear Governor Bryant:

At your request, this letter is to explain what effects Senate Bill 2362 and House Bill 878
wiU have on the Secretary of State's office (the Agency) for the remainder of PY 2016 and the
upcoming FY 2017.

Under House Bill 878, $18,000,000 will shottly be swept from various funds including
many in which the Agency serves as a trustee and other accounts which return money to
counti~s. municipalities and other State agencies for various services. If the sweep were to occur
today, here are the accounts where the money would come from and an explanation of the impact
the sweep would have upon this Agency and the recipients.

1. $2,689,458.99 Elections Support Fund

Due to the Jcgisllltiun, counties and municipalities will not nccivc the
dishurscnHnt of FY 2016 income this )'l'lll'. Further, out review of the legislation
docs not find any apptoprintion of these funds for the 2017-2018 fiscal year.

This fund was established in House Bill 683 in 20 I 0 Regular Session. The fund
receives income from the aru1lml report fees imposed upon foreign (out-of-state)
limited liability companies under Section 79-29-1203 ofthe Mississippi Code of
1972. (See also Section 23-15-5 regarding payments.)

Monies in this fund are to be used as follows :

1. Fifty percent (50%) shall be distributed annually to the counties, based on


the proportion that the population of a county bears to the total population
of the state, based on the most recent United States Census Bureau
information. The monies are to be used for acquiring, upgrading,
maintaining or repairing voting equipment, systems and supplies; hiring

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April21, 2016
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tempmcuy technical support; conducting elections using such voting


equipment 01 systems; and training election officials.
2. The remaining fifty percent (50%) of the monies in this fund ru:e to be
allocated annually to the Secretary of State to be expended for the p~1rpose
of ma.intaining. upgrading o~ equipping the Statewi{{e Elections
Management Systern (SEMS).
2. $1,936,543 Pub'lic Trust Tidelands Assessment Fund

Due to tbe legislation, tbe DeJ>artulent ofMawjne Resources (DMH.) will not
receive these funds in 2016, Further, our review of th~ legislation does not
find an,v appropriation oftbese funds for the 20172018 fiscal yeRr.
This fund was established in House Bill 44 in the fifth ex.traordinat'Y session of
2005 and codified in Miss. Code Anu. 29-15~ 10. F1Uld receives income from !
~
assessment-s for inland leases that are designated to relate to the public tidelands,
including the Point Cadet property. (Primarily, these are casinos -built inland after
HruTicane Katrina.) I
Any remaining monies within the 311 0 and 3113 :fl.mds after the payment of all
administrative costs for the flsoa.l year are to be disbw1led to the Department of
I
j
!:;
Marine Resources (DMR)J per Miss Code Ann. 29-15-9, Disuibution to DMR .!
for FY 2015 net income was made in September 2015. l
t
3.$3,021,110.89 Land Records Maintenance Fund
i
Due to the legislation, loss of these funds reimbUJsemcnt of tax forfeited !
property sales proceeds to citiest counties, Md school distJ.jcts will not be r
received bt 2016. Further, our aeview of the legislation does not find ~my l;:
appropriation oftbe8e funds fot the 2017~2018 fiscal yenr.
This fund was establishedin Miss. Code Ann. 29-1-95. The f1.1nd receives
income fiom the sale of tax-forfeited tan~, and pays taxes and fees and costs
allowed to the county and chanc6ty clerk. It is also to be used for the restonuion,
p1ese1'vation and maintenance of the records of state-owned land and the
disposition of lands sold to the State for taxes.
4. $1,172,312.46 Securities Enforcement Fund

Due to the legislation, no enforcement funds will be avail11ble to the Agency


for securities enforcement in 2016. Further, our review of the legislation
does not find MY nppl'Opt1ation of these funds for the Z017-Z018 fiscal year.
April21, 2016
Page 3

The Agency has autho1ity to accept revenue from fmes, awards or .settlements
produced by administrative or coul't actions involving the enforcement of the
Mississippi Securities Act. These monies are kept in this fund. Monies from this
fund can be expended for the purposes of enforcement of the Mississippi
Seculities Act

5. $1,593,970.52 Point Cadet Lensing Fund

Due to the legislntion, no funds will be available for distribution to the City of
Biloxi OJ' to the Institute for Higher Learning (lHL) for the University of
Southern Mississippi in 2016. Failure to distribute tbese funds may violnte
the Point Cadet Compromi~ and Settlement Agreement (effective August 15,
20.02) whlcb requires the payment of funds collected fom the leasing of
Golden Nugget Casino to these respective parties. Please c.ont.nct tbe
Attorney General ()Onccrning any violations of the cout order.
Thls fund was created to account for lease income received according to the Point
Cadet Compromise and Settlement Agreement from August 2002 between the
City of Biloxi, niL and the Agency. The Point Cadet p1operty is occupied by the
Golden Nugget Casino (the Casino). Rents paid by the Casino and received into
this fund are to be distributed as follows:

1. All rents from the Casino for h~tel and casino receipts up to $2,733,000
are to be distributed to the City of Biloxi.
2. All rents ftom the Casino for hotel and easino over $2,733,000 are to be
div.ided equally between the City of Biloxi, IHL and the Agency's fund
3113.
3, IHL is gual'anteed a minimUIIl annual payment of $125,000.

6. $4,845 Mississipp'i Auti8lll Board Fund

Due to the legislation, these funds will not be available to nllow for
bacl<grouncl check~ for potential licensees for applied behavior analysis in
2016. Further, our review of the legislation does not find any appropriation
of these funds for the 2017~2018 fiscal year.

This fund was established in House Bill885 in the 2015 Regular Session. The
fund receives income from fees, licenses and other charges assessed and collected
by the board.

These funds shall be used solely for the expenses of the board and to administer
the provisions ofthe MS At1tism Bill.
Apl'il21, 2016
Page4

7. $220,431.00 Regulation and Enforcement Fund

Due to the legi$latlon, these funds will not be available fot enforcement ns
equircd in 2016 or apparently in 2017. Further, our review of the legislnti'on
does not find any ap.propriation of these funds for the 2017M2018 fiscal year.
This fund was established in Senate Bill 2901 in the 2013 Regular Session. The
fund receives income from registrations, fines, awmds or settlements produced by
administrative or court actions irrvolving the regulation and enforcement of the
Pre-Need Cemetery and Funeral Registration Act, the Uniform Athlete Agents
Act and the Scrap Metal Dealer Act.

Funds shall be ex:pended for the ptU'Poses of regulation and enforcement of the
Pre-Need Cemetery and Funeral Registration Act, the Cemetery Law, the
Uniform Athlete Agents Act, and the Scrap Metal Dealer Act.

8.$1,248,215.03 HelP. Mississippi Vote Fund


Due to tl1e legislation, li'ivc Hundred Thousand Dollars ($500,000.00) wUJ not
be availablJ to counties and circuit clerks in 2016. Futther, our review of the
legislation does not fmd any appropl'intion of these funlls for tlw 2017-2018
fiscilJ year.
This fund was established in House Bill 562 in the 2006 Regular Session and
codified in Section 23~15~169.7 of the Mississippi Code of 1972. Fund receives
income from the filing and indexing fees for Uniform Commercial Code (UCC)
Secured Tl'ansactions for Mississippi counties1 as descdbed in Section 7-3-59 of
the Mississippi Code of 1972. Additional income is generated from the fees
charged for copies of voter rolls.

Monies in this fund aae to be used as follows:

1, Principal and interest payments for the $61000,000 bond used to purchase
voting machines. Future bond payments must be authorized by
legislation.
2. Additional monies in the fund may be used to:
a, Support the counties in their eff011s to pe1form voteJ: roll
maintenance;
b. Pwchase and maintain Help America Vote Act (HAY A) compliant
voting systems;
c. Maintain SEMS; and
d. Pay personnel to accomplish these functions.
April 21 1 2016
Page 5

9. $169,954.09 Pre~Necd Contract Loss Recovery Fund

Due to the legish\Uon, no claim will be paid when there u a failure to honor
the co11tract to bury someone or place a marker on a gravesite in 2016.
Further, our review of the legislation does not find any nppropriation of
these funds for the 2017-2018 fiscal year.
This ftmd was established in House Bill 1309 in the 2009 Regular Session for the
PrewNeed Contracts Loss Recovery Association (the Association) to be
adnrlnistered by the Agency. Fund was codified in Section 75w63-8l of the
Mississippi Code of 1972. Fund receives income from a $10 fee added to the cost
of every pre~need contract sold after July 1, 2009. Additional income can be
generated from the sale of cemeteries which have reverted to ownership by the
Agency.
Monies in this fund may be used from the fund to:

1. Make reimbursements on approved applications;

2. Purchase insurance to cove1losses and the Association liability;


3. Invest portions oftbe fund not c~U'l'ently needed to reimh1.nse losses;
4. Pay the expenses of the Association f{lr administering the fund, including
legal counselJ accountants. consultants, etc.; and
5. Pay the Association director compensation, limited to $50 per day.

10. $335,976.06 Voter ID Litigation Fund

This fund expires on J uoe 30, 2016 and will revert to the General Fund.

This fund was established in Senate Bill 2901 in the 2013 Regular Session for the
purpose of defraying the expenses associated with the litigation of voter
identification. The opening balance of$395,000 was funded from the Operating
Fund (3111) during October 2013. Senate Bill2894 in the 2015 Regular Session
expanded the purpose of this fund to defraying the costs of expenses in providing
votel' identification cards and voter outreach.

11. $5,607,183 Secretary of State's Operating Fund


These funds nre 1-eturned to the State Trensury every year as a "turn ba~k't
nod arc not affected by the legislation.

This fund was established in Miss. Code Ann. 7w9w22. This fund t'eceives
monies from the following major sources:
April21, 2016
Page6

1. Charity Registration fees


2. Securities Registration fees
3. Corporate Filing fees
4. UCCfees
5, Taxwforfeited land purchase application fees
Monies from this fund are used to defray expenses of the Agency which are not
specifically indicated within another fund. The Agency does an annual"tum
back, offunds to the State Treasury in the amount our revenues exceed our
expenses. Payment of this ~1urn back" is made in two installments. DistJibution
was made for October 2015 and March 2016.
The effect of Senate Bill.2362 means all funds previously collected such as the 'Elections
Support Fund, Public Trust Tideland Assessment. Land Records Maintenance; Point Cadet
Leasing and Help Mississippi Vote Fund w:ill be paid to the General Fund. These funds will no
longer be dependent on the amount of money the fund accumulates, but l'ather they will be
subject to the app1opriation of the State Legislature.
This is an explanation of Senate Bill 2362 and House Bill 878 as this Agency understands
how this legislation would affect us afte1 speaking at length with the Legislative Budget Staff
and the Department of Finance and Administration.

Sincerely,

~~
Doug Davis
Chief of Staff

CC:
Lieutenant Govemor Tate Reeves
Speaker Phillip Gunn
Kevin Upchurch, Executive Director, Department of Finance and Administration
Lanelle G. Mru'tin, President, Mississippi Circuit Clerks Association
Det'tick SUl'rette, Executive Director, Mississippi Association of Supervisors
Jamie Miller, Executive Director, Department of Marine Resources
Mayor Andrew Glitch, City of Biloxi
President Rodn~y Be1mett, University of Southern Mississippi
Shari Veazey, Executive Director, Mississippi Municipal League
Shay Chedotal, Executive Director, Mississippi Cemetery Association
Glenn Boyce, Commissioner, Institute of Highet Learning
VEIJl Lowezy, President, Election Commissioners Association of Mississippi