Jackson, Mississippi – The state of Mississippi is projected to experience a slower growth in its budget for the upcoming fiscal year compared to recent years, largely due to a decline in sales tax revenues.
In a meeting held on Thursday, prominent lawmakers estimated that the general fund will have approximately $7.6 billion available for the fiscal year starting July 1. This figure represents an increase of less than 1% from the current fiscal year, which stands at $7 billion.
Over the last two years, the general fund has seen average annual growth of about 5%, and prior to that, an 8% increase was recorded.
According to state economist Corey Miller’s report to the Joint Legislative Budget Committee, sales tax revenues have remained “essentially flat” in the first four months of this fiscal year. Meanwhile, there has been a noticeable decline in corporate income tax collections, contrasted by increases in both individual income tax and insurance premium taxes.
Estimates for general fund revenues are based on predictions regarding the state’s collections from various taxes, such as sales and income taxes, along with other revenue sources. Setting these estimates is a critical initial step in the budget formulation process.
The general fund constitutes the largest portion of the state’s budget sourced from state funds. In addition, Mississippi receives substantial federal funding each year to support programs like Medicaid, infrastructure, and various public services. However, lawmakers generally have limited discretion concerning the allocation of these federal resources.
Republican Governor Tate Reeves is advocating for a gradual elimination of the state income tax. In discussing the anticipated $600 million increase in state revenues next year, Reeves emphasized the importance of returning these funds to taxpayers.
In support of the governor’s tax initiative, Republican House Speaker Jason White noted the significance of the projected $600 million, indicating that it has garnered considerable attention from lawmakers.
Additionally, Republican Lieutenant Governor Delbert Hosemann has expressed intentions to reduce the state’s 7% sales tax on groceries, although he refrained from specifying the proposed reduction during the Thursday meeting.
The 14-member Budget Committee is expected to reconvene in December to present initial recommendations for state expenditure for the upcoming fiscal year starting on July 1. The full legislature will engage in discussions regarding these proposals during the three-month session set to commence in January, with the goal of finalizing a budget by the session’s conclusion.