Mississippi collected more tax revenue than expected during the month of April – the second straight month of positive tax collections.
Padded by a boon in individual income tax collections, April is just the fourth month of the past 21 months in which revenue projections were met.
In all, the state collected about 11 percent, or $75 million, more than projected in April. The month was boosted by 57 percent, or $99 million, more in individual income tax collections than projected.
With just two months remaining in the current fiscal year, Mississippi’s total tax collections are $6.3 million less than projected.
“Part of the year-over-year increase may be attributable to timing, but part of the surplus is likely due to pessimistic individual income tax withholdings during the fiscal year due to former President Obama’s anemic economic recovery,” Lt. Gov. Tate Reeves said in a statement. “Mississippians may have earned more in aggregate than they anticipated, and they are settling up in their April 15 tax returns.
“Two months does not guarantee a trend, but I remain optimistic that our revenue outlook is rebounding,” Reeves said.
Historically, April produces more individual income tax revenue than projected, as Mississippians submit tax returns to meet the April 15 tax deadline.
But last fiscal year, the state collected $62 million less than projected in personal income taxes — a factor that set leaders back and forcing additional mid-year budget cuts.
Throughout the month of April, extra resources were devoted to processing tax returns at the Department of Revenue, according to spokeswoman Kathy Waterbury. DOR employees in other departments were temporarily moved to help process the individual income tax returns, and the department hired 26 temporary employees in April.
All employees worked between 7 a.m. and 6 p.m. and half days on Saturdays during the month of April. Additionally, DOR employees worked on Confederate Memorial Day, a state holiday.
“As for processing the April filings, we are way ahead of where we were this time last year,” Waterbury said. “Plus, we have significantly less mail that is left to open.”
Most other tax categories for the month of April met projections, including sales tax, which has struggled to meet benchmarks in recent months.
However, corporate income and corporate franchise tax collections in April fell $28 million below projections.
But corporate tax collections came in much higher than projected last month, earning $49 million more than expected. Last year, lawmakers passed a law that moved the corporate tax due date from March 15 to April 15. Because of that date change, economists this year were unsure how much to project in corporate collections for March, April and May, said Waterbury.
Economists projected the state would collect $192 million in corporate tax revenues in April, but by the end of the month, the state had collected $165 million.
“Without any history to base our estimate on when revenue would arrive, the (corporate tax) estimate spread for March-May was an unknown,” Waterbury said last month. “We didn’t know how many would still file (and pay) in March, and how many would move to April.”
Waterbury also said that Department of Revenue employees, who are often strapped during the months of April and May dealing with individual income tax returns, may not be able to sift through all mail promptly, which could impact May and June revenue totals.
Tax revenues feed the state’s general fund, which finances state agencies and their daily operations. Lawmakers each legislative session can only dole out funding for agencies based on future revenue projections made by economists.
When revenues run below projections, the governor and Department of Finance and Administration Director Laura Jackson compensate by cutting state agencies’ budgets or transferring reserve fund money to the general fund.
Since the fiscal year began on July 1, 2016, Gov. Phil Bryant has made four mid-year budget cuts to offset lower-than-projected revenue collections.
• March 2017: $20.5 million cut, $39 million transfer from Rainy Day Fund
• February 2017: $43 million cut, $7 million transfer from Rainy Day Fund
• January 2017: $50.9 million cut, $4 million transfer from Rainy Day Fund
• September 2016: $56.8 million cut for “accounting error”
So far this fiscal year, Bryant has pulled $50 million out of the state’s largest reserve, the Rainy Day Fund. That $50 million is the usual statutory cap on what the governor may transfer from the fund, but the Legislature in March authorized him to draw up to $50 million more for fiscal year 2017.