Democrats in the Mississippi Legislature on Tuesday blamed the Republican leadership’s focus on tax cuts for the budget troubles the state is facing.
During an informal meeting with reporters, members of the Mississippi Legislative Democratic Caucus discussed what they called “the elephant in the room” — the state’s looming budget shortfall.
“We don’t want to just be critical of the leadership, we want to offer solutions and we would like to be a part of the process,” said Rep. David Baria, D-Bay St. Louis.
To start, Baria said, he and his Democrat colleagues would like to see the Legislature delay or repeal the implementation of a more than $400 million tax cut passed last session that phases out the 3 percent tax bracket for individuals and corporations and eliminates the franchise tax on businesses. It is set to take effect in July.
In defending the tax cuts last year, Republican legislative leaders said the cuts would create a pro-business environment in the state that would be attractive in luring new business and lead to the creation of more jobs.
Sen. Bill Stone, D-Holly Springs, said the combination of Mississippi’s “sluggish economy” and tax cuts and credits passed in previous years have led the state to its current crisis. Gov. Phil Bryant has already slashed agencies’ budgets twice this year to offset dwindling revenues and may be forced into another round of cuts.
Sen. David Blount, D-Jackson, said “reckless tax cuts” passed in years past will have a negative and lasting effect for years to come.
“The budget situation that we’re in today is a direct result of bad decisions by the Republican leadership, and it could have been avoided,” Blount said. “The only way to turn it around is to revisit some of those decisions.”
Lt. Gov. Tate Reeves, in a statement to Mississippi Today, pushed back forcefully: “Democrats in Mississippi are trying to impress their liberal counterparts in D.C. by fighting for higher taxes and bigger government, while my Republican colleagues and I work to lower taxpayers’ burden and reduce the overall size of government.”
“Republicans believe individuals know best how to spend their money more than any government agency ever will,” Reeves said. “Republicans also believe long-term economic growth is fostered by limited borrowing and limited government that spends only what it takes in.”
Lawmakers have repeatedly said the budget for Fiscal Year 2018 will be tight – the legislative budget proposal released in December would slash $195 million of the $6 billion budget, and most state agencies would be cut. Both Senate and House budget proposals mirror that forecast.
“Since 2012, Mississippi’s Republican legislative leadership has been granting tax cuts to favored programs, creating a drop of billions in anticipated revenue for the state over time,” the caucus said in a statement. An analysis last year from the Department of Revenue estimated that tax cuts enacted in previous years would cost the state almost $275 million in lost revenue in Fiscal Year 2017.
Tax revenues feed the state’s general fund, which finances state agencies and their daily operations. However, the state has collected just 55 percent of its projected revenue and met revenue projects just twice in the past 18 months.
Anticipating revenue shortfalls, Republican leaders of the appropriations process rededicated themselves to the 98% rule, meaning they would only appropriate 98% of the anticipated revenue for the fiscal year, leaving 2% for the state’s Rainy Day Fund to cover potential budget shortfalls.