/Are politicians ‘whistling past the graveyard’ with tax cut proposals while still phasing in past cuts

Are politicians ‘whistling past the graveyard’ with tax cut proposals while still phasing in past cuts

The state adopted a plan in 2016 to reduce taxes by $415 millions in 2016 dollars, by fiscal year 2028. According to projections made in 2016, when the Legislature was led by the then-Lt. Governor, approximately $206 million of this tax cut would have been implemented by the end of the current fiscal year 2022. Tate Reeves approved the Taxpayer Pay Raise Act. Sen. David Blount (D-Jackson), stated that “I keep telling people” that if they do not act, there will be a significant tax cut this year. The 2016 proposal reduced the personal income tax by $150 million. The tax cuts are going to businesses. A substantial amount (about 75% according a 2017 Mississippi Today analysis), is going to large corporations from outside the state. According to earlier data from the Department of Revenue, there were approximately 50 tax cuts primarily for businesses in the four-year term prior to the pivotal 2016 session. This combined cost was at least $140 millions annually. Some say Mississippi’s politicians continue to gloat about the graveyard while these tax cuts take effect and others are being considered. “Our roads are falling apart because we aren’t paying state employees.” “We have not funded schools,” Sen. Hobbie, D-Amory. said. “We don’t have water or sewer. You can reduce taxes but not have a functioning community. This is where we are headed now.” The Mississippi Adequate Education Program, which pays the state’s share to run local school districts, will need $362 million to be fully funded this session. That’s about $45 million more that the Senate tax cut proposal. When fully implemented, the House plan, which is led by Speaker Philip Gunn would cost approximately $1.4 billion. Reeves’ plan will cost approximately $1.8 billion. The MAEP has been underfunded for $3.1 billion since 2007, when it was last fully funded. This shortfall will become more significant as inflation rises and gas prices for buses and other supplies increase. Some may see the state leaders as stomping around in the proverbial graveyard. Others have a different perspective. “… We need to find a way out of the income tax, Gunn stated. “Now is the right time to give back money to the people. We’ve done everything. All of the government has been funded. We have surplus money. Let’s give that money back.” Last week, a heated argument broke out between Senate and state House leaders over the potential impact of competing tax plans. The Legislative Budget Office developed projections at the request Senate leaders, using assumptions about revenue growth and spending that are based on historical trends. They show that the House plan will put the state in debt by more than $250 Million by fiscal year 2024. House leaders argue that the Senate projections don’t take into account historical revenue growth and the current situation. The truth is that the Legislature could continue on its current spending pattern and have enough money to fund the first two years under the House plan. These plans, incidentally, are the only ones that do not require growth triggers to be passed. Due to multiple factors, the state is experiencing unprecedented revenue growth. Most of these factors are related to the COVID-19 epidemic. However, 1979 may provide some context to legislators. With state revenues high, lawmakers passed the biggest tax cut in state history that year — reducing the state’s income tax and eliminating the prescription drug and utility tax sales taxes. Recognizing the state’s need, lawmakers reversed course three years later and raised the income and sales taxes to help pay kindergartens, give teachers raises and address other education issues. However, revenue collection was slow in the 1980s which led to major budget cuts. In 1992, the legislature overrode the veto by then-Gov. Kirk Fordice wanted to raise taxes again — the sales and use tax went up from 6% to 7.7%. It is doubtful that politicians today would take the same action as their predecessors in 1992 and 1982. Many are afraid of tax cuts because they fear that today’s legislators will not vote to increase taxes to meet their needs. “If that revenue disappears this year, it won’t come back,” stated Sen. Derrick Simmons (D-Greenville).