Financial recess Legislators go home to mull the situation

The Legislature recessed Wednesday, scheduling a return May 4 to complete work on much of what it started out to do on Jan. 6, including finalizing a state budget for 2010 – the fiscal year beginning July 1, 2009.
The House and Senate will return earlier if Speaker Billy McCoy and Lt. Gov. Phil Bryant agree there’s need.
Left hanging were a compromise agreement on the amount of a cigarette tax increase, an issue that’s been all the way to the governor’s desk twice and seemed within an eyelash of agreement this year before negotiators stopped moving toward one another.
The cigarette tax increase is related to a second major item of unfinished business: Medicaid funding.
If a high-enough cigarette tax is agreed on and signed by Gov. Barbour, some of that revenue could be used to help fund Medicaid, which faces a $90 million gap in state funding.
Medicaid funding also is related to another major money obstacle, a proposal by the governor for taxes on hospitals, which had passed the Senate in previous sessions but which failed in both chambers so far this year.
In addition, legislators on recess will face questions about a pending increase in the cost of car tags, a primary form of taxation that would be offset if enough tobacco tax revenue is available. Otherwise, vehicle owners statewide will feel the pinch. How much depends on where car and truck owners live and how heavy county taxation is.
The hard reality, as many legislators admit, is that revenue from both a cigarette tax and a hospital tax are needed to make the 2010 budget work.
The nationwide recession has hit Mississippi’s revenue stream a hard blow: The estimated state income for 2010 has been reduced by $400 million. Some of that pain could be offset once the state figures out exactly how much and where federal stimulus funds can be spent (one reason for the recess until May), and if increased cigarette and hospital tax revenues become fact.
It seems simple enough that negotiators on the cigarette tax issue continue moving toward one another, remembering that they started out more than 50 cents per pack apart. Only pennies separate the two sides’ latest offers: 64 cents from the Senate and 75 cents from the House.
The Senate proposal also would raise the tax 20 cents per pack on non-premium-brand cigarettes and include a provision to raise Mississippi’s cigarette tax to contiguous states’ average, minus 1 percent, as the average increases.
The Senate’s proposal is substantial movement, and we hope negotiators close the gap during the recess.

Joe Rutherford

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