By TED CARTER
Tax cuts for business owners will likely be the trade-off Mississippians must make to gain new funding to fix up highways and bridges across the state.
The chairman of the Senate Finance Committee says he expects new fees and taxes to pay for transportation infrastructure maintenance will be part of a legislative package that includes tax cuts, including a phaseout of the state’s franchise tax on businesses.
The comments of Committee Chairman Joey Fillingane, a Sumrall Republican, on consolidating the measures followed a statement from Gov. Phil Bryant that tax cuts must accompany any increases in motor fuels taxes, sales taxes and fees on car rentals and new tags.
“As I’ve said before, any tax increase must be offset by corresponding tax cuts,” Bryant said in a statement soon after a 24-member task force created by the state’s Chamber of Commerce, the Mississippi Economic Council, issued a report that includes options for raising $375 million a year for 10 years to pay for Mississippi’s growing backlog of road-and-bridge maintenance.
Here are the funding options presented by the Blueprint Mississippi Transportation Infrastructure Task Force:
» A penny per gallon increase in the state’s 18.4 cents a gallon excise on gasoline and diesel fuel that would provide $21.7 million.
» A $10 fee increase on vehicle license plates that would provide $27.5 million.
» A general sales tax increase — exempting groceries and medicine — that would provide $177.8 million for each .5 percent increase.
» A sales tax on gasoline and diesel fuel that would generate $23.7 million for every .5 percent increase.
» A 2 percent excise tax increase on rental cars that would generate $2.5 million.
The new taxes and fees would be the first motor fuels taxes Mississippi has enacted since 1987, when legislators approved an 18.4 cent per gallon tax on motor fuels to pay for new highways.
Lt. Gov. Tate Reeves promised to carefully consider the proposals but has not publicly said his support, if given, would be conditioned on corresponding tax cuts. Reeves, who presides over the Senate, led an unsuccessful effort last year to phase out the state’s 2.5 percent franchise tax on business assets and is expected to try again this year. He will get help from Bryant and Republican legislative leaders who say phasing out the tax is a priority of the 2016 session.
Mississippi’s franchise tax is $2.50 per each $1,000 of either the value of the capital invested or the assessed value of property held in this state, whichever is greater, the state Department of Revenue says. The state has a minimum tax of $25.
The tax generated $260 million in the 2015 fiscal year that ended June 30. Collections for fiscal 2014 totaled $242 million.
Fillingane said in a Dec. 21 interview he wants his committee, a key panel for Senate revenue bills, to follow the governor’s suggestion for offsets. “I would echo the comments of the lieutenant governor and governor that we are not in favor of tax increases without offsets in other revenue sources,” said Fillingane, who sponsored last year’s repeal effort with Senate Bill 2839. The bill easily passed the Senate but failed to get a vote in the House.
“I believe we will see a tax revenue package that will lower some taxes like the franchise tax in exchange for increases on the other end of the ledger,” Fillingane said. “We don’t want a tax increase that will be a burden.”
Some Capitol watchers, including former Rep. Bobby Moak, a 33-year legislator, say passage could be difficult in 2016.
Many of the re-elected and newly elected Republican legislators pledged to voters on the campaign trail not to enact new taxes or fees.
“I think that this year — the first year of a new term – to break the promise of no additional fees or taxes is going to be a very heavy burden to carry,” said Moak, the House Democratic leader who lost his Bogue Chitto seat to Republican Vince Mangold in November.
Fillingane said he wants no part of a delay strategy.
“I don’t think we are going to put this decision off,” he said. “We are past the election. I don’t see us kicking the can down the road.”
Further delay could be costly – and risky, Fillingane said. “You can have a wonderful house but if you don’t patch the roof you can lose that house pretty quickly.”
Fillingane said he expects some adding or subtracting could be done with the funding sources recommended by the task force. Sen. Willie Simmons, chairman of the Transportation Committee, shares that expectation.
“They’ve given us something to start with,” said Simmons, a Cleveland Democrat.
He said he wants legislators to address new transportation taxes and fees with an open mind but worries about tying them to tax cuts.
Simmons cited the Joint Legislative Budget Committee’s warning in mid December that slow economic growth will force a 1.6 percent decrease from the current year budget. “We have to be very careful what we take out of the general fund,” Simmons said.