Mississippi lawmakers gathered at the Capitol Monday to discuss expectations for working groups that will closely assess the state’s tax structure and nine different state agency budgets.

Monday’s meeting was an orientation, of sorts, in which lawmakers making up the study groups were given an outline of what they were expected to achieve.

The tax study group – made up of 13 Republican lawmakers, five Democratic lawmakers, and Gov. Phil Bryant’s policy director, Drew Snyder – will assess other states’ tax systems, calling in experts from both inside and outside the state to provide “the best information” and offer recommendations to the group.

All options – from eliminating personal income tax to raising certain taxes to adopting an Internet sales tax – are on the table, Lt. Gov. Tate Reeves and House Speaker Philip Gunn said. Gunn even pitched the idea of moving up the widely discussed franchise tax phase out, which the Legislature passed in April, a year earlier than its scheduled 2018 implementation.

“We need a tax code that encourages investment in our state, not discourages it,” Reeves told the tax study group. “We want to move toward a user-based system rather than an income-based system … It’s about building on our successes the past five years.”

Reeves and Gunn said there was no set deadline for final recommendations to be made by the group, but Gunn said he would like to have a plan set by the start of the 2017 legislative session in January.

Tax study group members asked questions Monday about their duties in the coming weeks. Sen. Terry Burton, R-Newton, who is Senate president pro-tempore, asked if the group will assess the impacts of state tax changes on local and municipal governments. Reeves and Gunn said the group would take those matters into consideration.

Sen. Willie Simmons, D-Cleveland, asked if the group would be able to request the counsel of groups at Jackson State University and Mississippi State University. Gunn said the group would be required to receive the best information available, and it was a strong possibility that those two entities or others could be brought in.

Rep. Trey Lamar, R-Senatobia, said he would like to discuss implementing an Internet sales tax. Reeves said that federal guidelines might interfere with any plans to discuss that matter, but the lack of an Internet sales tax in Mississippi “absolutely puts our mom and pop businesses at a disadvantage.”

Nine additional groups of lawmakers will assess the budgets of 13 state agencies to determine whether certain agencies and expenditures within those agencies should be privatized or eliminated completely.

The agencies that will be studied are: Department of Education (K-12), Institutes for Higher Learning, Community Colleges, Department of Corrections, Department of Public Safety, Department of Medicaid, Department of Human Services, Department of Mental Health, Department of Health, Department of Transportation, Boards and Commissions, Internet Technologies and Department of State Buildings, Grounds and Property.

Reeves said “over 90 percent of general fund equivalents” are spent on these 13 agencies.

“Some of it was major expenditures, like Medicaid, Department of Education, and Corrections,” Gunn said of choosing which agencies to assess. “My thinking was to look at the ones where there’s large expenditures. There’s no real science to it other than thinking about where most of the dollars go.”

The Fiscal Year 2017 state budget has been discussed by many lawmakers on both sides of the aisle. It was passed in April with very little information given to legislators and agency heads before final approval. In the days following its passing, legislative leadership announced a $56 million overestimation, meaning that amount would need to be made up in the course of the 2017 fiscal year, which began July 1.

Additionally, Mississippi Attorney General Jim Hood, a Democrat, says at least $79 million of the special fund sweeps bill, which moved many agencies’ special funds into the general fund, cannot legally be swept. Last week, state Treasurer Lynn Fitch, a Republican, echoed Hood’s assessment, saying the state is now $135 million in debt.

Reeves and Gunn in July denied that the budget working groups were established because of any budget concerns they have, and they have both maintained that the financial shortcomings will be filled when the Legislature convenes in January.

Several specific expectations were discussed by Reeves and Gunn Monday. The study groups will focus on personnel within the departments: How many and which employees have received raises in the past five years, how do those pay raises reflect agency priorities, how many employees have been added to the department in five years, how does the total number of employees match the total population served.

The groups also will assess contracts and determine if those contracts are worthy of renewal or given to former employees of that agency or department. They’ll also assess in-state and out-of-state travel receipts and purchasing matters such as automobiles and other equipment.

“In five years, the Department of Health’s budget has increased more than 20 percent,” Reeves used as an example. “Instead of seeing the line item that says they spent this much on salaries, let’s look at the salaries of individuals in that department. If executive officers are getting paid bonuses every year, let’s determine if that’s something we should keep doing.”

Gunn and Reeves said the budget working groups should have final recommendations completed by November, which is when the Legislative Budget Office will begin compiling fiscal year 2018 budget recommendations to the Legislature.

The tax study group and budget study groups will meet numerous times in the coming weeks and months. The meetings will be announced at a later date and will be open to the public.

“We’re going to dig in and do our jobs,” said Sen. Buck Clarke, R-Hollandale, the Senate Appropriations Committee chairman. “This will ultimately be a very good thing for this state.”

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