By Bobby Harrison/NEMS Daily Journal Jackson Bureau
JACKSON – In November 2009, then-Gov. Haley Barbour warned it would take a long time for the nation – and specifically Mississippi – to dig out from what has been dubbed the Great Recession.
In the narrative for his budget proposal to the 2010 Legislature, the former governor pointed out that various economists warned it would take until fiscal year 2014 or 2015 for the state to collect as much revenue as it had in 2008 or for employment to return to the level it was before the recession hit.
“We should expect employment to stay below summer 2008 levels for at least 30 more months,” Barbour wrote. And of revenue collections, he concluded “numerous studies project that state revenues will likely not recover to FY 2008 levels until 2014 or 2015.”
He is being proven right.
According to the U.S. Bureau of Labor Statistics, there were 1.23 million Mississippians employed in the state in January 2008 compared to 1.22 million in May 2012.
Despite much better than expected revenue collections for the just completed 2012 fiscal year, 2008 was better. In fiscal year 2008, the state collected general fund revenue of $4.94 billion – the most in the state’s history. For the just-completed fiscal year, which ended on June 30, the state collected $4.85 billion.
If the state has another year of revenue collections like the just completed one where there was growth of 5.9 percent, the total collected in 2008 could be surpassed during the current year – 2013, just as Barbour predicted.
Still, state leaders, who have struggled with an unprecedented drop in tax collections during the economic slowdown and thus with substantial cuts in funds to state agencies, are urging caution.
“Strong indicators such as a 12.8 percent increase over previous years in corporate income tax and 7.7 percent increase in individual income tax indicate Mississippi is recovering from the national recession but I continue to urge state agencies to be prudent in their spending while best utilizing the resources at hand,” said Gov. Phil Bryant, who served as lieutenant governor during the slowdown in revenue collections.
State general fund revenue comes from various taxes, such as on retail items, on income, on corporate income and on casino gambling.
For years, various economists have identified the sales tax, which comprises 39 percent of the total general fund revenue, as the truest economic indicator of the various state taxes. Most retail items are taxed at 7 percent.
For the year, sales tax revenue was up a modest 3.6 percent – low compared to the 7.7 percent increase in the individual income tax, which makes up 30 percent of the total, or the corporate income tax increase of 12.8 percent. The corporate income tax makes up just less than 10 percent of the total revenue.
The casino gambling revenue collections, which make up 3 percent of the total, grew 3.5 percent.
Lt. Gov. Tate Reeves said, “I am very encouraged that year-over-year revenues grew over 5 percent this fiscal year, and while revenues for the fiscal year beat expectations, legislators have been told by the state’s economist that the country’s economic recovery is fragile.”
In 2009 Barbour predicted it would be for some time.