CATEGORY: EDT Editorials
Gov. Kirk Fordice wants a state income tax cut, and last week he produced a budget that provides for one. The governor’s plan calls for increased personal exemptions that would cost the state treasury $68 million over three years.
Fordice at least recognizes that fiscal responsibility entails phasing in a tax cut rather than enacting it all at once. But the nature of the spending reductions he proposes, the slower growth in state revenues, and the uncertain future of federal spending and its impact on Mississippi’s budget make any kind of tax cut premature this year.
To balance the budget for the first year of the tax cut, the governor would provide $8.7 million less for higher education and $5 million less for mental health than the Legislative Budget Committee recommends. The LBC had trimmed those agencies’ original requests.
Of course, the phase-in would accelerate in years two and three, increasing budget pressures. While spending committed by previous legislatures for priorities like rural fire protection and bridge repair will ease after the next fiscal year, other big expenditures -notably for prison construction -still loom. And then there’s the prospect of a complete overhaul in how federal dollars are funneled into the state, and how much money is available.
The governor dismisses impending federal spending reductions as a “paper tiger” that shouldn’t be used to argue against a state tax cut. But prudence dictates taking it into account. It would not be a conservative approach to plunge ahead toward tax cuts without more certainty about what lies ahead.
Legislative leaders, including some of Fordice’s fellow Republicans, share a sense of caution when it comes to cutting taxes this year. That caution is well advised. The new Legislature would do well to spend this session setting its spending priorities, planning for future needs and waiting for events in Washington to provide a clearer sense of where things are going.
It’s conceivable that a tax cut -perhaps a modification of the governor’s – would be appropriate once the picture becomes clearer. Until then, the cautious approach is the responsible one.