Mississippi tax collections continue to soar
Mississippi tax revenue collections through October, the first four months of the fiscal year, are about $160 million above the amount collected during the same period last year, according to the most recently released revenue report.
Through October, the state has collected $2.2 billion, which is 7.75 percent above the amount collected from various taxes during the same period in 2020.
The October revenue report released by the Legislative Budget Committee staff continues a trend of soaring revenue collections that began in the summer of 2020 as federal COVID-19 relief funds poured into the state. For the month of October, the state collected $584 million in revenue — up $47.3 million from the amount collected in October 2020.
The soaring revenue collections come as legislative leaders and Gov. Tate Reeves work to finalize budget proposals for consideration when the Legislature meets in full session in January to begin the task of developing a budget to fund state programs, such as education, health care and law enforcement, for the new fiscal year beginning July 1.
The 14 members of the Legislative Budget Committee, including Lt. Gov. Delbert Hosemann and Speaker Philip Gunn, are slated to meet Wednesday to agree on a revenue estimate with Reeves for the coming fiscal year.
That estimate will signify the early projection of revenue expected to be collected during the upcoming fiscal year to fund the state budget.
In developing that budget, the committee and the governor are likely to consider multiple factors, including:
— The state’s economic outlook, which impacts revenue collections.
— The current revenue collections.
— The fact that the state collected $924.5 million or 15.9 percent more in revenue during the past fiscal year, which ended June 30, than it did in the previ
ous year, meaning the state treasury is flush with funds.]
According to the October revenue report, just about all categories of state revenue collections are up for the year. The largest single source of revenue, the sales tax on retail items, is up $165.4 million or 26 percent, while the use tax, imposed on internet and other out-of-state sales, increased $10.3 million or 7.7 percent. The second largest source of revenue — the tax on personal income — increased only $6.6 million or less than 1 percent, while the corporate income tax decreased $32.8 million or 17.2 percent.
Another category that saw a decline in revenue collections is the tax on cigarettes, alcohol and beer, which dropped $5.1 million or 5.3 percent.
The decline is not surprising since liquor sales soared last year early in the pandemic as the governor shut down much of the state. Most other sources of revenue increased.
After the revenue estimate is adopted Wednesday, the governor is slated to release his budget proposal before Nov. 15, according to state law. It is possible that the governor will include in his proposal recommendations on how the state should spend $1.8 billion in federal American Rescue Plan funds that are supposed to be used to combat COVID-19, but in reality the state has considerable discretion on how the funds are spent.
The budget committee is slated to release it proposal in early December.
Both the governor and legislative leaders have indicated their hopes of providing a teacher pay raise during the upcoming session. In addition, the governor has proposed phasing out the state’s income tax, which accounts for about one-third of revenue collections. Gunn has proposed phasing out the income tax, but also raising other taxes, such as the tax on retail items, to offset the loss revenue.