Tax collections strong in final report before decision on teacher, state employee pay hike

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Tax collections were strong in the final revenue report before legislators decide if and how much of a pay raise to provide to state employees and school teachers.

The February report, released Friday by the staff of the Legislative Budget Committee, shows collections are $110.6 million or 3.35 percent above the amount collected during the same time period last year.

Tax collections are $129.1 million (3.93 percent) above the estimate for the year and $44.5 million (15.5 percent) for the month of February. The estimate is important because it represents the amount of money the Legislature appropriated in the 2018 session for the current budget year.

It is not uncommon for legislative leaders to meet late in the session to revise the estimate for the current fiscal year and the upcoming fiscal year, starting July 1, before hammering out a budget.

Based on the strong tax collections for February, it seems likely that they will meet to consider increasing the estimate.

Earlier this session, Senate Appropriations Chair Buck Clarke, R-Hollandale, said that unless the revenue estimate is increased it might be difficult to provide a pay raise for state employees – many of whom have not had a raise since 2007.

Gil Ford Photography

Rep. John Read, R-Gautier

House Appropriations Chair John Read, R-Gautier, said his goal is to provide pay raises for both teachers and state employees regardless of whether the estimate is raised. Read said he does not know whether legislative leaders would meet to increase the revenue estimate.

“That is above my pay grade,” he said. “If you listen to economists, they tell us there might be a downturn next year. I have been around for a long time. I have seen the roller coaster.

“But I am very thankful for what we have right now. Don’t get me wrong.”

The February report shows that the use tax – primarily the 7 percent tax levied on retail items purchased out of state – continues to grow, up $33.4 million or 18.7 percent for the year. Use tax collections have been growing since the state started in 2017 to collect the 7 percent tax on items purchased online.

Corporate tax collections, which have been flat or declining in recent years after the Legislature granted numerous tax breaks to companies, also are having a strong year – up $46 million or 23.1 percent.

The largest source of state revenue – the sales tax on retail items – was up $35.4 million or 2.8 percent. The second largest source of revenue, the tax on personal income, was down $663,638 or .06 percent.

Casino gambling, which since August has had sports betting as a new source of revenue, was up $6.4 million or 7.86 percent.