Analysis: Tax cuts winning battle in Mississippi Legislature over increasing state services



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JACKSON, Mississippi — The next time Mississippi lawmakers say the state can't afford something, don't believe them.

If there's anything this year's debate over tax cuts has laid bare, it's that Mississippi state brings in as much revenue in the future as Republican leaders predict, there are a lot of things the state could afford.

It's been clear since last summer that the current session was setting up to be a battle of tax cuts versus increasing funding for state services. So far, tax cut proposals are winning in a rout. But the decisions made could last far longer than through 2015 re-election campaigns. Lawmakers could set the stage for how much money there will be to pay for services over the next generation.

For example, Lt. Gov. Tate Reeves wants to cut $382 million worth of business franchise and individual income taxes. That number is awfully close to the $400 million a year that transportation officials say they need to cover the unmet maintenance needs of Mississippi's roads and bridges. The Mississippi Economic Council is supposed to propose a solution to the problem late this year, including tax plans, just in time for the 2016 Legislature.

Then there's House Speaker Philip Gunn's plan to phase out Mississippi's personal income tax, which currently brings in $1.7 billion.

Many Republicans oppose Medicaid expansion for ideological reasons — they dislike large government, distrust the feds and despise President Barack Obama. But they also worry about the money, considering Mississippi's struggle to pay for its share of the current ever-more-expensive Medicaid program.

A 2012 study by College Board economist Bob Neal found it would cost $560 million for the state share of Medicaid expansion in the first 12 years, averaging $47 million a year.

By comparison, Mississippi is projected to be reimbursing $126 million a year to businesses that pay inventory taxes by 2017, in a tax cut passed in 2012.

Republicans who oppose Medicaid expansion fear the state will pay a larger share of the check than currently projected. You could hear that last week when House Medicaid Chairman Bobby Howell, R-Kilmichael, again defended Mississippi's decision not to expand care to adults making less than 138 percent of poverty incomes.

"I just disagree," Howell said. "We would have other costs."

But Gunn's tax cut is so big that, if Mississippi took the individual income tax and devoted it to paying for Medicaid expansion instead of reducing it by those yearly amounts, the state could also pay the majority of the federal share. By the 2025 budget year, if Gunn's tax cut is in full effect, it would reduce income tax collections by close to $1 billion a year. Neal projected the whole cost of the expansion that year in Mississippi, state and federal, would be $1.38 billion.

Gunn's plan, in particular is ringing alarm bells among education advocates.

"It shows a complete disregard for the welfare of the people they were elected to serve," wrote Nancy Loome of the Parents Campaign, which pushes for more K-12 funding. Though lawmakers are pledging to put more money into K-12 this year, the state's funding formula is likely to remain $200 million short of what it says is needed to provide an adequate education.

University presidents also reacted, sending out a letter suggesting that helping more Mississippians earn college degrees might do more for the state's economy than tax cuts.

"As our economy rebounds, let's invest now in our public universities because our future depends upon it," wrote the eight presidents, including incoming Higher Education Commissioner Jim Borsig, on Feb. 24.


Follow Jeff Amy at: http://twitter.com/jeffamy

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