State revenue jump not tied to Katrina

BY BOBBY HARRISON

Daily Journal Jackson Bureau

JACKSON – Mississippi's dramatic jump in revenue collections has been largely attributed to the aftermath of Hurricane Katrina, but a study indicates that other states unaffected by the storm are experiencing similar increases.

“Virtually all state revenue sources were performing well as states wrapped up the first eight months of the fiscal year,” a recent study from the National Conference of State Legislators found. “Overall revenues were above original estimates for nearly every state and were above revised forecasts in many.”

Through the month of March, Mississippi's revenue collections are running $345 million above the same time period last year, a jump of 13.3 percent. The state fiscal year runs July 1 until June 30.

According to the study, 41 states have revised their revenue forecasts upward at least once, and many have done it several times. Alabama is among a handful of states now estimating double-digit growth in revenue collections for the current year.

Mississippi legislative leaders in March revised their budget estimate upward to 11 percent above the previous year. That revision came too late to show up in the National Conference of State Legislators study.

The estimate of revenue collections is important for states because it represents the amount of money available for legislators to appropriate. Mississippi revenue collections through March are running above the amount estimated by the legislative leaders.

In Mississippi, elected officials have been urging caution in spending the increased revenue collections, saying they are a result of the Hurricane Katrina recovery.

“Right now is positive, but we need to be cautious,” Republican Gov. Haley Barbour said recently.

Sen. Ralph Doxey, R-Holly Springs, agreed.

“I am of the firm opinion that our upswing is related to the storm,” Doxey said. “If we continue to experience the same increase, I will be leery of continuing to put that money in recurring budgets.”

State Economist Phil Pepper has predicted that the storm will be an economic boost to the state for years to come, and Pepper has said that not all of the increase in revenue collections is related to the storm. Areas other than the Coast have seen tax collections go up.

“The Gulf Coast is not the only driver behind the growth,” Pepper said recently.

Barbour vetoed legislation this past session that would have reduced or eliminated the 7 percent tax on groceries, and would have offset that revenue loss by raising cigarette taxes.

Among his reasons for the veto, he cited the “uncertainty” caused by Hurricane Katrina.

“I don't see us being in position to reduce revenue now, and I don't see us being in position to do it next year,” he said.

According to the National Conference of State Legislators study, 13 states, citing the improved revenue collections, have cut taxes, including Alabama. Wyoming eliminated its grocery tax, leaving 15 states that have a tax on food.

Mississippi has the nation's highest state-imposed tax on groceries.

Contact Bobby Harrison at (601) 353-3119 or bharri9015@aol.com