State revenue collections for the just completed 2019 fiscal year grew by 4.9 percent – the best showing since fiscal year 2014 when revenue grew by 5.1 percent.
From a political standpoint, the healthy growth for the fiscal year that ended June 30 comes at an opportune time for the state’s political leaders as they face primary elections in August and the general election in November. From a practical standpoint, the strong revenue collections mean legislative leaders and the governor will have a cushion as they work later this fiscal year to develop a budget to fund such items as education, health care and law enforcement.
According to the report released by the staff of the Legislative Budget Committee, total general fund revenue collections for the fiscal year running from July 1, 2018, to June 30 was $5.97 billion or $277.4 million more than in the previous fiscal year.
The Budget Committee report stressed that final numbers might be adjusted, but generally the initial report released by the Budget Committee staff is close to the final numbers.
Lt. Gov. Tate Reeves, vying for the Republican nomination for governor, said tax cuts passed in earlier sessions are paying off.
“The other side says in spite of – but I say because of – the largest tax cut in Mississippi history combined with cutting regulations and red tape, our economy is growing at levels not seen in years,” Reeves said in a statement. “Letting Mississippians keep more of their money in their pockets to spend and invest from conservative fiscal policies – at both the state and federal level – boosts our economy and leads to more taxpayers contributing to our growth.”
The strong revenue collections for the just completed fiscal year come after four years of sluggish growth rates at best.
Starting in fiscal year 2015 revenue collections began to dip. The slowdown came after the Legislature passed close to 50 tax cuts totaling more than $300 million annually.
Then in 2016, the Legislature passed the largest tax cut in state history that will take $415 million in today’s dollars out of the general fund when fully enacted in 10 years. In the current fiscal year, the 2016 tax cut is expected to have a negative impact of $92 million on the general fund.
Attorney General Jim Hood, who is running for governor, is among a group of Democrats who have been critical of the tax cuts. He said Mississippi’s rate of growth has trailed most other states, including surrounding states.
“Our economy has been flat as a result of all these giveaways,” he said, adding the state has not been able to address its needs because of the tax cuts.
During 2017-18, the state budget was slashed more than $360 million, resulting in cuts in services at the time in mental health and in other areas of health care.
For the just completed fiscal year, the largest growth in revenue was in use tax collections, which is a 7 percent tax levied on items purchased out of state, such as via the internet or through magazine sales. Use tax collections grew 26.8 percent or by $68.9 million.
Corporate tax collections grew by 12.5 percent or $71.4 million. Many of the tax cuts passed in recent years, including a large share of the 2016 tax cut bill, have been aimed at reducing corporate taxes. While corporate tax collections were strong during the past fiscal year, totaling $643.7 million, they are still $70 million less than the peak of $714.1 million collected in fiscal year 2015.
Sales and personal income collections, the two largest sources of revenue, grew more modestly at $55.1 million or 2.65 percent for sales tax and $71.5 million or 3.9 percent for personal income.
The revenue from casino gambling was up $6.8 million or 5.2 percent. Most Mississippi casinos, thanks to changes in state and federal laws, began allowing betting on sporting events during the past fiscal year, helping to spur some growth in the gambling industry.