A $415 million tax cut narrowly passed the Mississippi Legislature on Monday, packaged by legislative leaders with a bill providing $250 million in bonds for projects across the state.
With 71 votes needed for passage, House members voted 73 to 44 for the tax cut that was a centerpiece of Lt. Gov. Tate Reeves’ legislative agenda. Hours later the Senate followed suit, voting 36-14. The bill goes to Gov. Phil Bryant for signature.
“A flatter, fairer tax policy can grow the economy of our state and make Mississippi-grown businesses more competitive in the global marketplace,” Reeves said in a statement shortly after the Senate voted. “I am proud the Legislature has given Mississippians the opportunity to keep their hard-earned dollars in their pockets to spend at home.”
The bill phases out the 3 percent tax bracket for individuals and corporations as well as eliminating the franchise tax on businesses.
During Senate debate on the tax cuts, Sen. Hob Bryan, D-Amory, complained, “This legislation almost rises to the level of self-parody.
“We have a general fund that can’t meet basic needs of the state,” Bryan said. “We don’t have money, we got through with a budget that says there will be layoffs. We can’t tell the effect of the tax cuts we’ve got up … This is just not wise.”
House Ways and Means Chairman Rep. Jeff Smith, R-Columbus, said corporations with liability of $100,000 would no longer pay corporate income tax, which applies to all but about 200 companies in the state.
Smith said the cuts, which would not start until fiscal year 2018, represents $348 million from the treasury when fully implemented after 18 years. However, the Mississippi Department of Revenue estimates the cost will total $415 million to the treasury.
Smith intimated that getting approval for a bond bill for capital projects around the state hinged on the House’s passage of the tax cut.
“If we go home without doing something for our colleges and universities and (Mississippi Development Authority), I think we’re being negligent,” Smith said.
Adhering to the deal struck between House and Senate leadership, the Senate passed the House’s $250 million bonds bill 45-6, with one senator absent. The House passed the bond bill 108-9 even as the Senate still was debating the measure.
Several Democrats criticized the tax cut plan, which came on the heels of budget negotiations that slashed spending for a number of state agencies.
Smith defended the state’s tax incentive programs, including $24 million in tax credits for the Outlets of Mississippi in 2013 and the future Continental Tire plant in western Hinds County.
Smith said the outlet mall has broken even and was putting money back in the the state’s economy and, according to projections, Continental will break even in a few years.
“Within four years, we’ll have more than we put into it,” Smith said.
The 600-page bond bill distributes bonding authority to many state and municipal entities. Lawmakers from both houses also were allowed discretionary allocations, which will be distributed to state, municipal and private entities.
If signed by the governor, every state university with the exception of University of Southern Mississippi will receive between $6 million and $10 million in bonding authority in the upcoming fiscal year. USM is getting a direct appropriation in a similar amount for construction, rather than bonding authority. Community colleges will receive $25 million for buildings projects, and those individual colleges will receive a portion of that total based on an existing allocation formula.
Other bond recipients range from municipal renovation projects to park cleanup projects. Certain counties will receive bonds for infrastructure improvements like specific roads, bridges and dams. The Mississippi Developmental Authority will receive $15 million. The new Civil Rights Museum in downtown Jackson will receive $16.6 million. The Jackson and Hattiesburg zoos will receive $100,000 each.
“We’ve got crumbling roads and bridges, but we’re going to give funding to Science Exploration Center,” said Sen. Michael Watson, R-Pascagoula. “I don’t think a lot of these expenses are necessarily time sensitive. People are mad about the current state of affairs. At what point do we say, ‘Let’s do this differently.’”
Sen. Joey Fillingane, R-Sumrall and chairman of the Senate finance committee, defended many of the bond bill’s projects.
“I probably wouldn’t include a lot of these smaller projects,” Fillingane said. “But this is a joint project between the House and Senate, so I don’t get to make all of the decisions I’d like to make. It’s a group effort.”
Lawmakers in both houses passed the remaining appropriations bills before the deadline at day’s end. Agency cuts and possible layoffs were the talk of the Capitol as lawmakers sifted through the budget changes to each of the state’s departments and agencies. As was the case over the work weekend, many lawmakers continued to complain about the lack of information provided to them before they were asked to vote on the budget changes.
Some agencies saw significant cuts, such as the Mississippi Development Authority, whose $20.8 million was reduction of 22 percent from the current year’s budget. Funding for K-12 education saw a reduction of 11.5 percent, although the Mississippi Adequate Education Program, a formula used to allocate money to schools, remained level but $170 million less than the formula called for.
In other House action, members adopted a plan to renew the historic tax credit program by raising the limit to $120 million with an annual cap of $12 million. An earlier plan proposed an $8 million yearly cap.
Absent in the Senate was Sen. Dean Kirby, R-Pearl, who was taken to University of Mississippi Medical Center Monday morning after experiencing a fainting spell. He was awake and alert when paramedics arrived to transport him. Sen. Josh Harkins, R-Flowood, gave an update on Kirby’s condition and said he was doing fine and was being kept at the hospital Monday afternoon for tests.