State revenue collections, which have been sluggish for more than a year, spiked in March even as the Legislature was ending the 2017 session by making major budget cuts because of those ongoing revenue woes.
Collections for the month of March were $52.4 million or 12.5 percent above the official estimate, according to information provided by the Mississippi Department of Revenue. The revenue estimate is important because it represents the amount of money that is believed to be available for the Legislature to appropriate.
In this case, the money was appropriated in the 2016 legislative session for the fiscal year that ends June 30. For the fiscal year through March, collections still are $80.8 million or 2.2 percent below the estimate.
The collections for the month of March mark the first time since last May that revenue exceeded the estimate.
The collections by the Department of Revenue provide most, but not all, of the revenue data for the state. The Department of Revenue report details revenue from the general taxes collected by the state, ranging from the sales tax to the income tax to the corporate tax and others, such as the taxes on tobacco, liquor and casino gambling.
The staff of the Legislative Budget Committee will compile a more thorough report in the coming week, although the final numbers will not vary much from what is reported by the Department of Revenue.
The positive report comes one week after the Legislature concluded the 2017 regular session where substantial budget cuts were made – more than 10 percent for some agencies – because of the ongoing sluggish revenue collections. But legislators, because of various issues, did not pass budgets for the office of Attorney General, the Mississippi Department of Transportation and state Aid Road Program and will have to return before July in special session to deal with those agencies.
When asked if the good revenue report in March might provide an opportunity to revise some of the appropriations made last week to state agencies or to put more money in infrastructure needs as many groups have said is needed, Speaker Philip Gunn R-Clinton, said, ““We’re certainly encouraged by the increase in revenue and will have to wait to see if the trend continues.”
Cautious comments also were made by Lt. Gov. Tate Reeves and Gov. Phil Bryant, both Republicans.
“It would be unwise to base spending decisions on one month of collections, and I believe we should stick with our very conservative revenue estimate of zero growth for FY 2018 adopted just two weeks ago,” Reeves said.
Clay Chandler, a spokesman for Bryant, said the governor “is encouraged by the revenue collections for March and is hopeful it marks the start of a trend. Whatever collections are, he will ensure government follows the lead of Mississippi taxpayers and businesses and lives within its means.”
Corporate tax collections, by far, were the main contributor to the positive March. Corporate tax collections, which have been anemic for much of the fiscal year, were $48.8 million or 85 percent above projections.
Kathy Waterbury, a spokeswoman for the Department of Revenue, said in 2016 the Legislature changed the due date for corporate taxes from March 15 to April 15.
“Without any history, the estimate spread for March-May was an unknown,” she explained in an e-mail. “We didn’t know how many would still file (and pay) in March and how many would move to April.”
In other words, if businesses waited until April 15 to file, that means April and May could be good months. But if most of the corporations filed in March, that could drag down collections for the upcoming months.
For the month of March, though, many other categories remained sluggish. Sales tax collections, the largest single source of revenue for the state, were down 4.8 million or 2.9 percent, while individual income tax collections were down $843,155 or .85 percent.
On the other hand, use tax collections, such as the tax collected on retail items sold on the internet, were up $2.4 million or 13.4 percent. Internet retail giant Amazon started in March collecting voluntarily for the state the 7 percent tax on items sold to Mississippians.
March also was a good month for the state at the casinos with revenue increasing $4.7 million or 40.2 percent.