Mississippi could spend half billion more in 2022 budget

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JACKSON, Miss. (Mississippi Today) – The 14-member Legislative Budget Committee, with Gov. Tate Reeves breaking tradition and not attending, adopted a revenue estimate Wednesday for the coming fiscal year of $6.49 billion — a $566 million increase over the projection used to develop the budget for the current fiscal year.

State law requires the governor and budget committee to agree on a revenue estimate to begin the task of developing a budget for the new fiscal year, which begins July 1, 2022.

In the past, with few exceptions, the governor and budget committee have met jointly to adopt the revenue estimate in November before the start of the next legislative session in January. But Reeves, who has been at odds with the legislative leadership over his refusal to call a special session to approve a medical marijuana program as supported by voters in 2020, opted to send a letter and a representative to Wednesday’s meeting.

Lt. Gov. Delbert Hosemann, who is presiding over the committee this year, read the governor’s letter that said he concurred with the revenue estimate recommended by a panel of state’s financial experts. Members of the budget committee then approved the estimate provided by the group of financial experts, which includes State Economist Corey Miller.

Speaking of the strong state tax collections, House Speaker Philip Gunn said, “We have an opportunity — an opportunity to give money back to the taxpayers. If ever conditions were right to do that, it is now.”

Both Gunn and Reeves have offered separate proposals to phase out the state’s tax on personal income, which accounts for about one-third of general fund revenue. Gunn’s proposal also has included increases in other taxes, such as on retail items, to offset the loss revenue. Reeves has not proposed any additional revenue to make up for the cut in the income tax.

When asked Wednesday if the Legislature is still planning on providing a salary increase for teachers, the speaker said, “Absolutely.”

Before adopting the revenue estimate, which will be used to craft a budget proposal, Miller told the legislators that the large influx in federal money provided to battle COVID-19 is helping to drive the Mississippi economy and the surge in tax collections. The state, like the federal government, is poised to see economic growth, though the state is projected to return to its pre-COVID levels of employment much later than the nation as a whole.

The state, like the nation, is seeing a significant increase in wages, driven in part by a shortage of workers accelerating supply chain issues and giving rise to inflation. He said the state wages are projected to grow by 4.7% during the current calendar year.

“The projected growth in personal income, if realized, will mark the largest annual increase since 1981,” Miller told the legislative committee members.

He said the supply chain issues and inflation increases are not expected to subside until 2022.

Miller added many people who lost their jobs during the pandemic have opted not to return to the workforce. Some decided to retire early and some are looking for jobs other than the employment they had pre-pandemic. He said the search for new jobs is particularly true for people employed in the service sector.

With the adoption of the revenue estimate, the next steps in the state budgeting process are for Reeves to release his proposal prior to Nov. 5, and for the budget committee to release its recommendation on Dec. 7.

Then, the full Legislature will begin work in January to craft a general fund budget funding education, health care, law enforcement and other aspects of state government for the new fiscal year beginning July 1.

State Rep. Robert Johnson, D-Natchez, the House minority leader and member of the Legislative Black Caucus, said Democrats and Black Caucus members would be developing plans on how to use the massive amount of federal money the state is receiving at the same time revenue collections are surging.

“We have people who need help,” Johnson said last week on Mississippi Today’s “The Other Side” podcast.

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