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Penny tax until 2023

The City of Jackson’s hopes for an eventual fix to its crumbling infrastructure, especially its water and sewer systems, has survived a key Mississippi Senate Finance Committee vote.

The committee approved an amendment to legislation passed two years ago to allow Jackson to stage a referendum on enacting a penny special option sales tax to fund the infrastructure work. That bill, however, had a 2014 sunset provision for the special tax and specified that only 80 percent of the money could be spent on water and sewer, with the remainder going for road maintenance.

The amendments that cleared the Finance Committee extend the sunset of the special tax to 2023 and remove the proportional spending in favor of allowing the money to go to a mix of water and sewer and public safety enhancements.

Mayor Harvey Johnson made the amendments the city’s single legislative priority for the year. Though a special option sales tax would have to receive a super majority of 60 percent from city voters, the mayor’s office says it thinks voters would prefer the penny tax over huge increases in water and sewer bills that would be needed to fund the infrastructure overhaul. City officials say they expect the penny tax could raise $15 million to $20 million a year.

A provision for an oversight committee remains. It requires that spending of the tax be reviewed by a panel made up of three city residents appointed by the governor, three city residents appointed by the mayor and a selection by the mayor of four of eight nominees presented by the Jackson Chamber of Commerce. The four selections from the Chamber’s list of nominees do not have to be Jackson residents but must have “significant” business interests in the city.

State Sen. John Horhn, author of the original special option tax legislation and sponsor of this year’s amendments, said he expects a “bit of battle on the Senate floor” on the amendments, noting opponents are concerned the penny sales tax is to regressive and hits hardest at those least able to pay. Legislators were highly reluctant to approve special option tax two years ago and persuading them to extend the tax for another decade will be a challenge, he said.

“We typically don’t do this local option sales tax on non-tourism related activities,” Horhn said.

The veteran metro Jackson lawmaker said he expects success with the amendments if they should make it through the Senate for a vote in a more-receptive House. “If it survives that process my optimism rises tremendously,” he said of the Senate vote, which has a mid-week deadline.

Walter Zinn, a lobbyists for Jackson City Hall and assistant to the mayor, said he will emphasize to lawmakers the huge burden that would be placed on city ratepayers absent a sales tax hike. “Increasing one cents on certain items may pale in comparison…. I don’t think people really understand the level of impoverishment,” he said. “Thirty percent of the city is under the poverty rate.”

Groceries and restaurant meals would be exempt from the tax, according to Duane O’Neill, president & CEO of the Greater Jackson Chamber Partnership, which has joined with the city in pursuing passage of the special option sales tax amendments.

Zinn said it would be “a huge success” for the city to leave this year’s legislative session with approval of the sales tax amendments.

Some legislators worry that giving in to Jackson’s request to hold a vote on a multi-year sales tax would lead other cities to want the same thing. O’Neil, whose agency works on economic development projects with communities within a multi-county region, said he expects a number of cities will be asking for approval of special option sales tax referendums.

“I think it’s going to be tough” for them to get the green light, he added.

One of those likely to come forward is the City of Ridgeland, which wants to enact a special option tax to fund a redevelopment district.

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