Businesses closing to stop the spread of coronavirus will have a significant impact on the state’s two main sources of revenue, the 7 percent sales tax on most retail products and the income tax. Other revenue sources, including taxes earned by casinos, could also be affected. Jason White, R-West, House Pro Tem, stated during a Rules Committee meeting that the session was being suspended because of coronavirus worries that state revenue would be significantly declining. The legislators were buoyed by improving revenue collections and planned to give teachers a minimum $1,000 annual pay increase, which would cost about $78million per year. They also plan to give state employees an unspecified pay rise. House Speaker Philip Gunn (R-Clinton) and Republican Lieutenant Governor. The Senate’s President, Delbert Hosemann (who presides over it), will decide to reconvene, possibly sometime before July 1. “We are closely watching revenue,” said Dean Kirby (R-Pearl), Senate President Pro Tem. It isn’t dropping at this point. But we do expect a decline. It could bring us back to where it was a year ago, or even years ago. However, we are not panicking at this stage.” Herb Frierson, the State Revenue Commissioner, did not respond to questions about the impact of the coronavirus pandemic on state revenue collections. Hosemann stated that legislative leaders were already meeting with Frierson and Darrin Webb, state economists, to assess the state’s economic and revenue impacts. This will take place on a weekly basis. Hosemann stated that “we are going to have a decline just like very small businesses in Mississippi.” One silver lining is that Mississippi relies more heavily on the retail sales tax for food than other states. Mississippi has the highest food sales tax in the country, at 7 percent. Groceries sales have not declined since people continue to flock to grocers to stock-up. Mississippi also has approximately $1 billion in different reserve accounts, including over $400 million in the Working Cash Stabilization fund, commonly known as the rainy-day fund. Additionally, the revenue collections for the current fiscal year have reached $188.4million. This is 5.6 percent more than the revenue estimate that legislators used to approve their 2019 session budget. To meet this estimate, collections would need to see a substantial drop in revenue over the last three-and-a half months. In the worst-case scenario, if collections fail to meet the estimate, either the governor or the Legislature will have to cut budgets during the last months of the fiscal calendar year (which ends June 30) or dip into reserve funds. Kirby stated, “I believe we will be OK.” “…Nobody knows for certain.” The bigger problem in funding state government is the fiscal year that begins July 1, and could be the biggest issue. The new fiscal year will see the start of the teacher and state employee raises that were planned by the Legislature prior to the coronavirus spreading in the U.S. A prolonged economic slowdown could have a negative impact on revenue collection for the next fiscal year. Webb, the state economist said on social media that the country is in recession and that “the economy begins gradual recovery within the first quarter 2021.” Mississippi is following a similar pattern but its growth rates are still below the national average.” Webb added that “new information is constantly coming in.” The outlook could change depending on the information.” If Congress passes the next round legislation to address the coronavirus, state officials might be able to learn more. It is expected that the legislation will include financial assistance in terms of federal payments for most Americans and some industry support. The federal legislation should include funds to assist states in filling budget gaps caused by the coronavirus and the resulting economic slowdown. Michael Leachman is the senior director of state fiscal analysis at the center. He said that the economic slowdown could prove to be especially detrimental for states because it will affect their two largest sources of revenue, the sales tax and the income tax. The states won’t have the financial support from the federal government to help their citizens when they need it most. They will also be forced to lay off state employees, further fueling the probable recession. Leachman stated that the rate at which the economy is falling is alarming. Robert Greenstein, president of the Center for Budget and Policy Priorities, stated that there is a possibility that the economic downturn could prove to be worse than the 2008-2009 Great Recession. He stated that the American Recovery and Reinvestment Act, which was passed in that period, helped to restart the economy. The package provided significant funding for struggling state governments. The federal government delivered a large amount of these funds to the states through an increase in the federal match for their Medicaid program, which provides health care to the most vulnerable. He stated that a bigger stimulus package is required than the one passed in 2009. The state of Mississippi saw a dramatic drop in revenue between 2008 and 2010. The recovery act, however, poured approximately $1 billion into the state’s coffers during that same period. This was not just for Medicaid but also for other areas such as education. According to a recent Center for Budget and Policy Priorities study, Mississippi is among the least prepared states. It is the only state in the bottom 10 in all four categories. Hosemann stated that he doesn’t believe there will be gaps in the state program. The suspension of the legislative session was necessary for health reasons. However, Senator Hob Bryan (D-Amory) said that it will also allow legislators to examine what the federal government does to help with budget woes. It will also give them time to decide how federal money should go. Bryan stated that “we don’t know how to proceed until federal legislation is passed.” The session was also suspended in 2009 by the legislature, but that was at the end to check what federal money was heading to the state for budget gaps. [Click here for Mississippi Today’s COVID-19 Resources Portal. ]