JACKSON - With the calendar speeding toward the beginning of a new fiscal year, House and Senate budget leaders became bogged down Tuesday on whether to spend money on a new computer system for the state Tax Commission.

House and Senate leaders are trying to reach a budget agreement for the full Legislature to vote on before the new fiscal year begins July 1.

If they cannot agree, it is not clear how everything from schools, to prisons to Medicaid will be affected.

Senate Appropriations Committee Chairman Alan Nunnelee, R-Tupelo, argued Tuesday that a portion of the $40 million Attorney General Jim Hood recently recouped in a lawsuit settlement with Microsoft should be spent on the new computer system.

"We're going to help to get people cheating on their taxes," Nunnelee said.

But House Appropriations Committee Chairman Johnny Stringer, D-Montrose, argued that the money should be used to plug shortfalls in this tough budget year instead of buying the computer equipment, which is estimated to cost $30 million.

"I'm not willing to lay people off to buy software," said Stringer.

Indeed, the state Tax Commission officials said they would have to lay off auditors if their budget were cut as much as was being talked about in the budget negotiations.

They said they needed additional money for personnel to collect taxes and for the computer system.

Nunnelee said he would be willing to not spend the money on software, but did not want to appropriate the lawsuit settlement funds to recurring expenses since it was one-time money.

Stringer said there are other one-time expenditures in the budget where the lawsuit settlement funds could be used.

Stringer added the House already is carrying forward $85 million as the Senate leadership and Gov. Haley Barbour demanded.

Stringer said, "We have backed up and negotiated on numbers and then you have changed. I have been here 29 years and I have never seen it like this. This is just delay, delay, delay."

Lt. Gov. Phil Bryant said it was not an effort to delay, but to get a honest, accurate budget.

Nunnelee said he wanted a budget with only limited use of one-time money to pay recurring expenses and with money carried forward for the upcoming budget years that he said will be more difficult than this one.

"We are 13 days out from a new budget year," said Rep. Cecil Brown. "If we agreed on a budget right now, I don't think we could put it in place by July 1."

While Stringer and Nunnelee were trying to resolve budget issues Tuesday in Bryant's office, other legislators worked to reach agreement on how much - if any - to increase the tax on hospitals to help fund the Medicaid portion of the budget.

Contact Bobby Harrison at (601) 353-3119 or bobby.harrison@djournal.com.