During a celebratory news conference last week at the end of the special session Gov. Phil Bryant called to provide additional money for infrastructure needs on both the state and local levels, House Speaker Philip Gunn, R-Clinton, said cities and counties “will immediately see the results of what we have done.”
While most would agree that in the special session bills were passed to provide local governmental officials their much sought after help with infrastructure needs, for most the aid will not be immediate. It will take at least months, or in some cases years, for most of the money to reach local governments to help, for instance, with the repair of the about 500 bridges that have been closed across the state for safety reasons.
“It will take a while for the money to accumulate,” said Derrick Surrette, executive director of the Mississippi Association of Supervisors. “It will not be a quick fix, but it will be a fix to a point.”
During the five day special session, three bills passed and all will provide additional funding for infrastructure needs – an estimated $200 million annually when fully enacted, plus an additional $360 million in one-time sources of money. Those bills will:
• Enact a lottery
• Divert state funds to local governments
• Divvy up $700 million in BP lawsuit settlement funds and provide funds for earmarked infrastructure projects throughout the state
The BP bill will provide the most immediate relief, but that relief will be sporadic, such as providing funds for street improvements to multiple municipalities in Tippah County in northeast Mississippi or for street improvements to Wiggins in south Mississippi, for instance, but providing no help to many other cities and towns. The bill doled out $111 million to 128 projects throughout the state. Many of the projects were for infrastructure, but there is no discernible methodology on how the projects were awarded.
The money for the projects will be awarded by the state Department of Finance and Administration.
Chuck McIntosh, a spokesman for DFA, said the agency “ is putting a communication plan in place through the Mississippi Municipal League and the Mississippi Association of Supervisors to clearly define the process for disbursing the funds to the local governments. DFA intends to enter into a memorandum of understanding with each recipient with requirements outlined for quarterly reporting, procurement, etc. As a reminder, only about 50 percent of the money is available now, and the remainder will be available close to the end of the calendar year.”
McIntosh said the bill does not specify which projects are to receive funding first, so the money for the earmarks will be disbursed on a first come basis.
The bill that is expected to have the most significant impact for local governments over a period of time is the proposal that diverts 35 percent of the use tax revenue from the state to local governments. The use tax is a 7 percent tax on retail items purchased out of state by Mississippians such as via the internet or through catalogs.
During the session, some legislators indicated the local governments would begin receiving funds through the diversion in January. But in reality, they will not begin receiving the funds until January 2020, according to Kathy Waterbury, a spokeswoman for the Department of Revenue.
According to Waterbury, the state will begin diverting 8.75 percent of the use tax revenue from state coffers in August 2019. The total amount diverted to the local governments – 35 percent – will be phased in over a four-year period.
Waterbury said the Department of Revenue will disburse those funds to the cities and counties every January and July.
Shari Veazey, executive director of the Mississippi Municipal League, said the bill will be welcomed relief for the state’s about 300 municipalities, but conceded it will not provide immediate relief.
“All cities, towns and villages stand to benefit from this legislation,” the Municipal League said via social media after the bill passed.
It is estimated that when fully enacted between $120 million and $130 million in use tax revenue will be diverted annually to the cities and counties. And it is believed that the use tax will generate a growing stream of revenue as more people opt to shop online.
The use tax diversion bill also creates a $250 million fund controlled by the three-member state Transportation Commission to be used for emergency infrastructure needs on both the state and local levels. The funds will be raised by the sale of bonds, incurring long-term debt for the state. The bonds are not expected to be sold until October, meaning the revenue will be available after that.
The primary source of continuing revenue for the state transportation system will come from the lottery. The bill enacting the lottery mandates that the first $80 million of revenue generated annually for the state from the lottery be used for state highway and bridge needs.
Any revenue beyond that $80 million is supposed to be dedicated to education.
But according to the primary legislative champions of the bill during the special session, it most likely will be two years before the lottery is enacted in Mississippi. Revenue from the state’s newly allowed sports betting also will be diverted to state transportation needs. It is estimated that sports betting will generate between $5 million and $15 million annually.