Tax Cut Deal Still Needs Work by Legislature

By Emily Wagster PettusAssociated Press

JACKSON – It’s election year, and Mississippi policymakers are engaged in an escalating debate over who can offer the biggest, juiciest tax cut.

The resolution is weeks away, with legislators facing a late March deadline to agree on tax and spending plans. It’s not clear what sort of tax cut will survive, if any. That could depend on a clash of wills and a fight over which legislators can claim most credit for the final product.

The Senate Democratic Leader, Hob Bryan of Amory, said with more than a bit of exasperation in his voice last week that the Republican-led effort to reduce revenue could undermine budgets for schools, transportation and other vital state services.

“There’s never been anything like what’s going on this year,” Bryan said. “I’m inclined to offer a constitutional amendment to prohibit the Legislature from convening during election years.”

Those pushing for tax cuts, including Republican Rep. Mark Formby of Picayune, said letting people keep more of what they earn will stimulate the economy.

“Government produces nothing except what it gains from the pocket of the taxpayer,” Formby said.

For generations, Mississippi has been one of the poorest states in the nation. The state-funded portion of the annual budget is just over $6 billion now, with billions more from the federal government.

Republican Gov. Phil Bryant said months ago that he wants to reduce the state income tax for people earning less than about $53,000 a year. His proposal would return $79 million a year to about 300,000 households, for an average tax cut of about $250 a year. The cut would take effect only in years when state revenue grows at least 3 percent.

Next up was Republican Lt. Gov. Tate Reeves, who proposed phasing out both the business franchise tax and one portion of the state income tax. The estimated price tag on his plan is $382 million.

Not to be outdone, Republican House Speaker Philip Gunn proposed a $1.7 billion plan to phase out the state personal income tax over 15 years, with cuts coming only in years that state revenue grows at least 3 percent. The personal income tax is one of the largest sources of state revenue.

The Reeves plan is Senate Bill 2839 and it has passed the Senate. The Gunn plan is House Bill 1629 and it has passed the House. The two chambers are exchanging bills for more work.

For now, the Bryant plan is nowhere to be seen, but it could become an option for legislators to consider during final negotiations.

The House debate was particularly contentious. Democrats warned that Republicans were trying to create campaign fodder: Imagine postcards or radio commercials that labelpeople as tax-and-spend liberals. To combat that, Democrats offered 10 amendments that would force Republicans to go on record against certain types of tax cuts, including a reduction in grocery taxes.

One amendment said the income tax could be phased out only if the school budget formula, the Mississippi Adequate Education Program, were fully funded for three consecutive years. MAEP was put into law in 1997 as a way to give schools enough money to meet midlevel academic standards, but it has been fully funded only twice, and those were not consecutive years.

All of the Democrats’ amendments failed. But in losing those votes, some Democrats got part of what they wanted – just as some Republicans will get part of what they want even if all the proposals die.

They got a chance to say they voted for tax cuts, and the other party voted against them.