With rare exceptions, session that just wrapped unkind to tax credits
Each session, Secretary of State Delbert Hosemann submits a bundle of legislative proposals that seek to reform one way or another the state’s business laws.
The session that ended Thursday was no exception. Hosemann had some success — bills that would do everything from change the valuation process for public improvement districts to creating a single entity to govern registered agents were signed by Gov. Phil Bryant – but what didn’t pass is probably more notable.
Every single piece of legislation Hosemann proposed that offered a tax credit that was not already on the books failed. Perished bills would have offered tax credits to businesses either relocating their headquarters here or expanding existing headquarters; they would have offered a 7 percent credit to businesses that enter into a written research agreement with a Mississippi university; and they would have offered businesses the option of passing through a job-creation tax credit rarely used by start-ups to employees.
Each died in the Senate, which is important to note. All session, it was known around the Capitol that any kind of tax credits would have a hard time in the upper chamber. One very large exception to that was the passage of the inventory tax rebate system, which will phase out the unpopular tax over the next five years. Groups like the Mississippi Manufacturers Association had pushed for the phase-out for what seemed like forever.
Moving forward, tax credits might meet equal resistance in the House, based on what Appropriations Chairman Herb Frierson, R-Poplarville, told the Stennis Capitol Press Corps April 23.
Frierson said lawmakers will have to make themselves “reign in” their instinct to pass every business-related tax credit in future sessions. The state’s budget, which still hasn’t fully recovered from the worst of times in 2008 and 2009 and will have enormous holes to fill with the loss of various sources of federal money, demands that happen, he added.
“There’s going to be a great debate over this,” Frierson said. He was quick to point out that no reasonable person could oppose a tax credit if it was proven on the front end that it would eventually create the kind of economic development that could replace the lost revenue.
The vetting process for those kinds of things, though, will only get more rigorous.