Mississippi legislative leaders said tax collections are more than $500 million above the estimate used to set the current year’s budget and the state economy appears to be chugging along as lawmakers get down to setting a $6 billion budget for the coming year.
“We’re in great financial shape,” House Speaker Philip Gunn said after a Joint Legislative Budget Committee meeting on Friday. Lawmakers adopted “the big number,” the total amount of money they can spend as they haggle out a state budget over the next couple of weeks.
That big number is $5.93 billion — about $173 million, or 3%, more than lawmakers had estimated in November that they’d have to spend for fiscal 2022 that begins July 1.
“I want to be clear, this doesn’t mean (every agency) gets an across-the-board increase,” said Lt. Gov. Delbert Hosemann. “… But lots of the cuts we made last year were about 2.5%, so this should restore those … But we will be looking at each budget individually to make those decisions.”
As for the $500 million cash on hand from the current FY21 budget, Gunn and Hosemann said that number may be artificially high because of $230 million in income taxes that normally would have been collected in the previous year were collected in the current budget year after filing deadlines were pushed back because of COVID-19.
Hosemann said he suspects the state budget also saw a boon because of “a significant infusion of federal money” from coronavirus relief funds Congress approved.
The rosy financial projections adopted Friday come as lawmakers debate a massive overhaul of the state’s tax system being pushed by Gunn and the House GOP leadership. It would eliminate the state income tax over the next decade, and increase sales, “sin” and other user or consumption taxes to make up the difference. Hosemann and the Senate have been lukewarm on the idea and killed the original proposal, although the House has attempted to revive it for more debate.
State Economist Corey Miller told the legislative budget committee on Friday that revenue collections continue to be strong for the current fiscal year despite the COVID-19 pandemic. Through February, state tax collections are $500.3 million or 14.7% above the estimate used by legislators in the 2020 session when developing the current budget.
Those surplus funds could be used when developing a budget for the upcoming fiscal year, though in recent years legislators have tried to direct such surplus funds to the rainy day fund, capital expense fund and for other one-time expenses.
Gunn and Hosemann said they plan to sock about $30 million into the rainy day fund this session, which would bring it flush to $558 million.
In addition to the $5.9 billion in tax revenue, legislators will also have another $500 million in funds from other sources, such as tobacco lawsuit settlement funds, that are used in the state-support budget.