State revenue is projected to grow 2.6 percent during the upcoming fiscal year, beginning July 1, according to legislative leaders and Gov. Phil Bryant.
The 14-member Legislative Budget Committee and Bryant adopted the estimate Thursday morning in advance of the 2019 legislative session. The revenue estimate must be adopted before the work of crafting a budget for the next fiscal year can begin.
If growth reaches 2.6 percent, as anticipated, then legislative leaders will have $5.8 billion in general fund revenue for various state programs, ranging from education to health care to law enforcement.
The 2.6 percent would mean about $146 million more for the next fiscal year than officials project collecting in general fund revenue for the current fiscal year.
The Budget Committee, which includes Lt. Gov. Tate Reeves, Speaker Philip Gunn and the governor, adopt the estimate based on the recommendations of the state’s financial experts, including Treasurer Lynn Fitch, state Economist Darrin Webb and Revenue Commissioner Herb Frierson.
The estimate coincided with the release of the October revenue report from the staff of the Legislative Budget Committee.
For the month of October, revenue collections were $31 million below the estimate. For the year, starting July 1, collections were $13.7 million above the estimate.
If collections for the year drop too much below the estimate, the governor and/or legislators must make mid-year budget cuts.
For the year, collections are 1.26 percent above the amount collected during the same time period last year.
If revenue does grow 2.6 percent during the next fiscal year as projected by the governor and the Budget Committee, it would be a greater increase than in recent years. In recent years, collections have been stagnant or even non-existent in some years. The slow growth resulted in Bryant and the Legislature having to make multiple rounds of cuts in 2016-17, reducing the appropriation by more than 10 percent for some agencies.
One of the biggest drains on revenue collections continues to be corporate tax collections. For the year, corporate tax collections are down 5.5 percent or $5.5 million.
The decline comes as 2016 legislation that reduced corporate tax collections by more than $300 million is being phased in.
Use tax collections, such as the 7 percent levy on items purchased on the internet, is up 19.2 percent or $15.3 million for the year. The state’s two largest sources of revenue, the sales tax on retail items is up 2.5 percent or $14.1 million and the tax on personal income, is essentially level, up $3.1 million or 0.5 percent.