JACKSON — Mississippi’s tax revenues have recovered from the recession, approaching the $5-billion mark for the first time.
State Department of Revenue figures show tax receipts grew 5 percent in the 2013 budget year, which ended Sunday. That’s a state record, and the first time revenues have exceeded their 2008 total of $4.83 billion since the recession began.
The strong finish to the budget year means more than $400 million could be waiting in the bank in January, when lawmakers begin setting the 2015 budget.
“It’s safe to say it’s going to be three to four hundred million,” said Senate Appropriations Committee Chairman Eugene “Buck” Clarke, R-Hollandale. “It probably could bump four.”
House Appropriations Committee Chairman Herb Frierson, R-Poplarville, said the state would have an increase in recurring revenue that could be devoted to ongoing needs of more than $100 million.
Gov. Phil Bryant’s staff said it was waiting to see the small fraction of collections that come in through other agencies before discussing the results in depth. But even Monday, the governor said things looked good.
“While this is preliminary information it appears our state’s economy continues to improve,” Republican governor said in a statement.
Mississippi is on track to finish more than $180 million above the most recent revenue prediction for fiscal 2013. Legislators set an original prediction in the spring of 2012, then revised their guess in November after watching how the economy was performing.
State senators, let by Republican Lt. Gov. Tate Reeves, declined a chance to increase the fiscal 2013 tax estimate this spring, despite a push by the House to do so. Clarke said he didn’t believe that the large year-end surplus reflected badly on that decision.
Tax receipts have surged more strongly than jobs or Mississippi’s overall economy. The state’s economy grew 2.4 percent in 2012. Jobs have yet to fully rebound to levels seen before the recession.
Mississippi actually spends much more than $5 billion a year, boosted by billions in federal aid. In the 2012 budget year, the state took in $15.6 billion from all sources. But it spent $16.1 billion, as leaders drained bank accounts to try to avoid even deeper cuts to state services. Clarke noted that the state had burned through a savings account from tobacco lawsuit settlements during the recession, propping up year-to-year spending. Now, it doesn’t have that cushion in case of another downturn.
“We’ve got to be careful,” Clarke said.
He also echoed some national reports that found surges in state income tax revenue related to federal tax increases that kicked in at the beginning of 2013. Some large taxpayers may have decided to push as much income into 2012 as possible to avoid paying those higher rates, said Clarke, an accountant who said he saw such behavior among some of his clients.
Still, top budget writers say they expect pressure from schools, universities and state agencies that saw budgets slashed during four years of austerity. Adding to that pressure will be the 2015 state elections that will loom on the horizon.
“Your third and your fourth years are pretty pressured,” Frierson said of spending demands in the state’s four-year political cycle. “It starts in the third and builds to a crescendo in the fourth.”
The Legislature allotted about $300 million less for fiscal year 2014 than what was called for by the K-12 spending formula, known as the Mississippi Adequate Education Program. But MAEP is undergoing a once-every-four-years revision and will likely call for less money in 2014 because the group of average school districts used to calculate the formula spent less during the recession. Clarke and Frierson said they expect the amount called for to decrease by around $75 million.
Still, there will be plenty of demands. Frierson said that if the figures hold up, he’s ready to consider a pay increase for state employees. A $50 million plan to provide increases for some workers was presented during the 2013 session.
“My job just got a lot more difficult because there’s cash to spend,” Frierson said. “It’s easy to say ‘no’ when you don’t have any cash.”