By TED CARTER
Here’s some news that leaders in the Mississippi Legislature will have to ponder before deciding next week to begin phasing out the state business franchise tax and certain individual income tax rates: Revenue collections for March fell $20 million below projections, a trend that started in December with revenues coming in $21.6 million lower than expected.
“This only represents DOR transfers to the state’s general fund and does not include other state sources of GF revenue,” she added.
The March shortfall of $20 million translates to 3.58 percent below estimates, Waterbury said.
When Gov. Phil Bryant ordered $39.8 million in budget cuts on Jan. 20, total collections through December stood $53.95 million short of estimates. That means an additional shortfall of $25.7 million since Bryant ordered the cuts.
Bryant said in January the shortfall the state is experiencing in tax collections “is further complicated because the anticipated beginning balance in the General Fund was short by approximately $10 million.”
Meanwhile, legislative leaders face a deadline of next week to move revenue bills out of their respective houses. This includes a phase out of the state’s franchise tax on businesses and a multi-year phase out of the state’s two lowest tax brackets for individuals.
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 has a minimum franchise tax of $25.
The tax generated $260 million in the 2015 fiscal year that ended June 30. Collections for fiscal 2014 totaled $242 million.
Projections are the cuts would cost the state $100 annually. This would be on top of $350 million in cuts initiated during Bryant’s first term.
The first-year hit to the state’s budget is projected at $18 million, according to Sen. Joey Fillingane, chair of the Senate Finance Committee.
Bryant, Fillingane and other leaders in the Republican controlled Legislature insist that with time, the tax cuts will spur new business spending and job creation, thus boosting state revenues.
Filllingane said after Bryant’s budget cuts Mississippi is on sound footing and won’t feel the kind of fiscal duress neighboring Louisiana is enduring this year after several years of extensive tax cutting by former Gov. Bobby Jindal.
First, he said, the bottom fell of the oil and gas market there, severely diminishing state revenue collections. On top of that, he said, Louisiana “began spending one-time money like drunken sailors.”
Nor, will Mississippi feel the fiscal plain Kansas has felt the past several years after drastic tax cutting, he said. “They cut, like, everything,” Fillingane said. “We are not cutting anything like the amount Kansas” cut.