OPINION: Former senator takes aim at electric co-ops, oil tax

JACKSON – Former Sen. Nevin Sledge of Cleveland has had a pet peeve ever since he served three terms in the Legislature: public or commercial entities that benefit from governmental services that don’t pay their fair share to carry the load of government.
What ticked off Sledge (now 88) was a recent news story in the Northeast Mississippi Daily Journal telling how the untaxed rural electric co-ops are stashing millions of earnings in investments (some risky), or cash. Sledge said before he left the Legislature in the 1990s he pushed REA’s to pony up in-lieu taxes as the Tennessee Valley Authority does in the dozen counties in north Mississippi to help support county schools and general expenses.
“They (the REAs) did it for awhile until I left the Legislature, then quit,” said the retired Bolivar County automobile dealer and farmer. Sledge doesn’t let privately-owned power companies go unscathed, either. He charges that power companies are allowed to set their own assessments for property taxes. “I learned that from personal experience when I moved my business into a new building and found it assessed 10 times more than the power company in a similar size building,” he said.
Sledge has some timely ideas on how the state could shake a lot more revenue out of taxes in the existing tax structure that have remained unchanged for decades. He advocates lawmakers revisit the existing tax code before eyeing the two usual suspects – income and sales tax. He does think, however, that some of the 400 exemptions from the sales tax need to be eliminated and that the income tax needs some updating.
Two old taxes high on Sledge’s list for adjustment are the timber severance tax and the oil and gas severance tax, both of which were levied 60 years ago when the price of oil, lumber and land were far lower than today.
One gross inequity, Sledge says, is that land on which timber is growing “is still assessed for $150 an acre, but you couldn’t buy it for $1,250 an acre.” The severance tax is only collected when timber is harvested, using a value list compiled years ago by the State Tax Commission.
“A 6 percent tax per barrel on crude oil may have been fair back in 1944 when oil was selling for $2.50 a barrel, but not now when it is trading for $80 a barrel,” Sledge declared. He supported the move by then-Gov. William Winter to increase the tax to 8 percent a barrel to help fund the 1982 Education Reform Act, Sledge said, “but the oil lobby beat it.”
Although he hails from the heart of the plantation Delta, Sledge thinks “multi-millionaire farmers” are given far too many sales tax exemptions from expensive farm equipment. “Last year the Legislature took more sales tax off farm equipment bought by these rich (and subsidized) farmers,” he said, adding: “the state needs to take a look at all the exemptions that have been slipped into the sales tax law.”
Retired longtime Bolivar County Tax Collector Mickey Thompson said his pet peeve is developers (including doctors or other professionals as investors) of Section 42 low-cost housing units who want to pay taxes only on the rent they receive and exclude the federal subsidies they get to build the housing. “That’s not just up here in the Delta, it’s all over the state,” Thompson said.
Sledge had picked up on what I had written several months ago about a bill pushed unanimously through the state Senate near adjournment of the 2009 session to take all sales tax off CO2 gas produced and piped to several oil-producing counties in south Mississippi, and also outside the state from a huge dome of CO2 discovered a few years ago in Rankin County, just outside of Jackson. The bill was caught in the House and amended to put on the same one-half of 1 percent tax long applied to natural gas sold for industrial use. “They (the Jackson metro area) are sitting on a gold mine,” said Sledge, adding: “that’s the second biggest reservoir of CO2 in the world and we should be getting more than that small tax from it.”
What struck him as very surprising when he served in the Legislature “was how little legislators understood the state’s tax structure, or wanted to learn about it.”
Doesn’t sound very encouraging does it?

Bill Minor has covered Mississippi politics since 1947. Contact him at PO Box 1243, Jackson, MS 39215-1243, or e-mail at edinman@earthlink.net.

Bill Minor