Revenue to fund the Mississippi Department of Transportation from the 18.4-cent per gallon motor fuel tax grew nearly 40% between 1989 and 2019.
During a similar time, sales tax revenue grew by about 156% and personal income tax revenue increased a whopping 365%.
Revenue from the sales tax and personal income tax provide about 70% of the state’s share of funding for education, public health and many other areas of state government. But that revenue does not go for state transportation needs. The gas/diesel tax provides more than half of state funding for the Department of Transportation.
The fact that gas tax revenue is growing at a relatively slow rate compared to the income tax and sales tax is an example of why various groups — ranging from the Mississippi Economic Council to the Legislature’s own oversight committee — have argued that additional funds are needed to aid with the maintenance and construction on state highways. The motor fuel tax simply is not growing fast enough to keep up with inflation.
In August 2018 state leaders — then-Gov. Phil Bryant, House Speaker Philip Gunn and then-Lt. Gov. Tate Reeves, who is now governor — gave themselves a collective pat on the back for enacting a lottery in a special session and dedicating the first $80 million of that revenue annually for work on state highways. They viewed the lottery as a way to avoid raising the gasoline tax.
While studies by the MEC and others indicated an additional $300 million per year was needed to address state highway needs, everyone conceded the lottery revenue was better than nothing.
But if Lt. Gov. Delbert Hosemann and his Senate colleagues get their way, the state will essentially be back at near nothing in terms of new revenue for Mississippi’s highways.
The Senate, with Hosemann’s support, has voted to transfer those lottery funds from the state highway system to the road and bridge needs of local governments.
In the 2018 special session, the much-ballyhooed agreement was that the lottery revenue would go toward the state system and a transfer of use tax funds from education, law enforcement and other state needs would go to local governments for transportation needs. The lottery funds going to the state system would be capped at $80 million annually, while it was anticipated the use tax funds would generate about $120 annually for local roads and bridges. And that would be a growing source of revenue for local governments, as the use tax — a tax on internet purchases — continues to grow.
Earlier this session on a bizarre night when the Senate was in session past midnight, members by a 40-10 margin rejected the bill that transferred the lottery funds from the state system to local roads and bridges. But, as is often the case in the Mississippi Legislature, seldom is an issue actually dead. Senate leaders that night took up a more comprehensive transportation bill that included the same language to transfer the funds.
The bill also increased the weight limits for large trucks carrying agriculture products and other goods and transferred the Department of Transportation law enforcement officers to Public Safety.
Senate Appropriations Chairs Briggs Hopson, R-Vicksburg, offered what he thought was “a no brainer amendment” to remove the lottery revenue from the bill.
“We already voted this down once,” Hospon reasoned. But lo and behold, the Senate changed its mind, rejecting Hopson’s amendment and transferring the lottery revenue to local roads and bridges.
In the House, Transportation Committee Chair Charles Busby, R-Pascagoula, said he opposes the Senate plan to transfer the lottery revenue.
Busby said he feared in the August 2018 special session the lottery revenue for state roads and bridges “was a vulnerable revenue stream. People would be reaching out for it often. This is a demonstration of that. Just as I feared.”
Hosemann said the money is needed on the local level to fix bridges that will be impacted by the proposed increase in the weight limits. He said the increase in the weight limits on Mississippi’s often decrepit roads and bridges is needed to ensure the state’s farmers and others are competitive with counterparts in surrounding states. Busby pointed out that about 137 bridges on the state system will have to be posted to prevent the heavier traffic on them if the Senate weight limit increase is passed.
Without the lottery revenue, there will be less money to fix those state bridges that would be impacted by heavier weight limits. The only other revenue dedicated to the state system in the August 2018 special session is expected to generate about $20 million annually.
Fight over the lottery revenue, pitting state roads and bridges against local roads and bridges, will play out during the final days of the legislative session.