The state of Mississippi collected $47 million less than expected in March, offsetting several positive months of collections in the current fiscal year.
Corporate income tax collections made up the biggest shortfall in the month, falling $22 million, or 22 percent, below projections. Sales tax collections and individual income tax collections also fell short of projections, according to the Legislative Budget Office’s monthly revenue report.
After the low collections in March, the state now faces the final three months of the fiscal year slightly below total projections. To date, the state has collected $73 million less than at this point last year.
Historically, April produces more individual income tax revenue than projected, as Mississippians submit tax returns to meet the April 15 tax deadline.
Tax collections feed the general fund, which pay for governmental services like public education, public safety, and Medicaid reimbursements. If revenues continue to fall below projections, officials must authorize dips into reserve funds or make mid-year budget cuts.
Lawmakers in late March passed a $6.1 billion budget for next fiscal year, marking a 0.37 percent increase from the current fiscal year’s budget. Legislative leaders have expressed optimism that revenue numbers will trend upward, though the current fiscal year’s budget was set lower than last fiscal year’s budget.
The current fiscal year is the first in which a corporate franchise tax cut is expected to affect revenue collections. Corporate franchise tax collections are not tracked during the fiscal year, said Misti Munroe, chief revenue officer for the Legislative Budget Office. Instead, they are tallied on corporations’ annual tax returns.
Over the next ten years, the largest tax cut in state history, passed in 2016, is projected to strip at least $415 million per year from revenue collections.
According to Department of Revenue projections, Mississippi stands to lose $46.5 million from the tax cuts in fiscal year 2019. By fiscal year 2022, the tax cuts are projected to reduce state revenue by $70.8 million each fiscal year.
By fiscal year 2028, the state will lose the full $415 million per year in revenue.