By Bobby Harrison
Daily Journal Jackson Bureau
JACKSON – Through February of the current fiscal year, which started July 1, the state has collected $38.2 million, or 1.16 percent, less in revenue than it did during the same period one year ago.
And when comparing just revenue from general tax collections and other recurring sources of revenue, the state has collected $56 million, or 1.76 percent, less than during the same period last year. That figure excludes new revenue sources garnered when the Legislature swept up various special funds during the 2016 session and excludes one-time sources of money.
Unless revenue collections improve significantly during the final four months of the fiscal year, the state will collect less revenue than it did the previous year for only the second time in modern history. In the midst of the Great Recession in 2009-11, the state had back-to-back years of declining revenue.
Against the background of the disappointing revenue collections, the Legislature is working to finalize a budget for the upcoming fiscal year. Almost all agencies will face cuts on top of the reductions made by the 2016 Legislature and multiple mid-year cuts made by Gov. Phil Bryant to offset revenue shortfalls.
“We are dealing with a pie. I don’t see any revenue growing,” conceded Senate Appropriations Chair Buck Clarke, R-Hollandale, at a recent meeting of his committee where members were expressing concern with the size of the cuts for some agencies, such as the Department of Health.
The latest report compiled by the staff of the Legislative Budget Committee shows that through February, collections on retail items and on corporations continue to be sluggish. Corporate income tax collections for the fiscal year through February are $33.5 million, or 13.5 percent, less than the previous year, but there is still hope that corporate taxes will improve during the final months. Sales tax collections are $16.5 million, or 1.3 percent, below the previous year.
The other major source of revenue, the tax on personal income, is relatively flat at $62,724, or .01 percent, above the amount collected during the previous year.
In recent years, the Legislature has passed a multitude of bills that exempted items from the 7 percent tax on retail items and provided tax relief for corporations.
Starting in the next fiscal year will be a 10-year phase-in of the largest tax cut in the state’s history, an estimated $415 million in today’s dollars, directed primarily at business and on personal income.
Some blame the tax cuts for the revenue shortfall.
“You simply cannot give away hundreds of millions a year…and have enough money to run government,” Sen. Hob Bryan, D-Amory, said recently.
Supporters of the tax cuts say they eventually will make Mississippi more competitive with other states and will grow the economy. They cite the fact that multiple states are not meeting their revenue projections, but it is not clear that many states are actually facing a decline in revenue projections like here in Mississippi.
The Legislature added a new stream of revenue for the state during the 2016 session by transferring various special funds, garnered through traffic citations, assessments on various criminal convictions and other fees, to the general fund. Even with that additional $71 million, state revenue collections still are down $38.2 million, or 1.16 percent.
With the ongoing sluggish revenue collections, it is possible that the legislative leadership might have to lower the estimate of the amount of money they will have to budget for the upcoming fiscal year.
That would result in the Legislature having to make more cuts this session.