Legislative leaders and Gov. Tate Reeves have agreed on a revenue estimate that can end in lawmakers having about $500 million greater than last 12 months to spend after they convene in January to start out work on a budget for the brand new fiscal 12 months.
Members of the Legislative Budget Committee, including House Speaker Philip Gunn and Lt. Gov. Delbert Hosemann, met with Reeves Wednesday morning to develop the official revenue estimate of $7.52 billion for the brand new fiscal 12 months, starting July 1. The revenue estimate utilized by House and Senate leaders this past April when legislators passed the budget for the present fiscal 12 months was nearly $7 billion.
The 7% increase within the revenue estimate continues a trend of unprecedented growth in tax collections for the state. Mississippi, thanks partly to federal spending and inflationary growth, now has a surplus of greater than $2 billion.
The estimate for the upcoming fiscal 12 months, though, based on the estimate made Wednesday, indicates that legislative leaders and the governor consider that revenue growth can be slowing. The brand new revenue estimate represents only an 0.3% increase over what financial experts consider can be collected in taxes in the course of the current fiscal 12 months.
The estimate was advisable to the legislative leaders by state Economist Corey Miller and 4 other state financial experts. State law mandates that the governor and members of the Legislative Budget Committee agree on a revenue estimate before the beginning of every legislative session.
Hosemann, who presides over the Senate, didn’t oppose the estimate for the fiscal 12 months starting July 1, but identified that a recession is probably going.
And a recession could end in a dip in revenue.
In response to questions from Hosemann, Miller said anticipated additional rate of interest hikes by the Federal Reserve in an effort to curtail inflation “might be enough to tip us right into a (national) recession.”
Reeves and Gunn each have advocated for eliminating the state income tax while revenue collections are strong. The income tax accounts for about one-third of general fund revenue. The sales tax is the one revenue source larger than the income tax, making up about 36% of the overall fund.
Reeves told the Mississippi Economic Council during a recent meeting “you’ve my word that so long as I’m governor I won’t ever stop fighting to completely eliminate the income tax in Mississippi.”
Hosemann has advocated using a number of the surplus funds for a one-time rebate to taxpayers.
During Wednesday’s meeting with legislative leaders, Reeves said there may be “opportunity there for us to chop government spending to return extra money to taxpayers.”
In response to Miller declaring that state employment growth had stalled this 12 months and was not increasing, Reeves said it isn’t due to an absence of job openings but due to “the lack and unwillingness of some to enter the labor market.”
