State in the middle of historic times in terms of state disposable income – The Oxford Eagle

At the end of the 2021 session, legislative leaders established a revenue estimate of $5.93 billion. This estimate represented the amount of revenue the state was expected to collect in the coming fiscal year and the amount that should be available to finance the budget.

This fiscal year ended on June 30, and the state actually – based on early numbers – collected $7.38 billion, or about $1.46 billion more than the estimate made at the end of the April 2021 legislative session. In other words, lawmakers budgeted based on expected revenues of $5.94 billion, but the state collected $7.38 billion instead, which resulted in a surplus.

According to data compiled by staff of the Legislative Budget Committee, revenue collected for the fiscal year that began July 1, 2021 and ended June 30 increased 9.5% year-over-year . This increase in revenue comes on top of a record increase of 15.9% for the previous year. It is important to note that in most fiscal years, the growth in collected revenue is 3% or less.

In terms of government revenue collection, these are truly historic times. The only time in recent memory when the state experienced similar growth was in the 1990s with the start of casino gambling and all the construction related to the new industry and in the 2000s following the Hurricane Katrina and subsequent construction after the Gulf Coast. was beaten up. The above-average growth of the 1990s lasted much of the decade, while post-Katrina growth was shorter, lasting only a few years.

Time will tell how long the current spurt of revenue growth lasts, but the last two-year period is unprecedented, even compared to what happened during the casino bonanza and what happened happened after Katrina.

During the past fiscal year, sales tax revenue increased by 13.8% or $309.3 million, while income tax revenue increased by $273.4 million or 12 .3%.

In the other categories for the financial year just ended:

  • Oil and gas departure taxes increased by $15.5 million or 85%.
  • User tax collections increased by $20.2 million or 5%.
  • Casino tax revenue increased by $15.4 million or 10%.
  • Corporate tax collections increased by $9.4 million or 1.1%.
  • Cigarette, beer and liquor tax revenue decreased by $10.9 million or 3.8%

Staff at the Legislative Budget Committee, which tracks state revenue, have long said the final count of the surplus isn’t known each year until August, when the books are closed on the Previous exercice. But based on early numbers, the surplus — somewhere around $1.4 billion — will be the largest on record at the end of a fiscal year.

The Legislative Assembly will likely decide what to do with these excess funds during the next legislative session which begins in January. The Legislative Assembly entered the 2022 session with approximately $1.1 billion in surplus funds and spent $956 million of those funds on specific projects and needs for state agencies, leaving approximately $150 million dollars in what is called the capital expenditure fund.

The legislature chose to spend the funds on hundreds of projects, such as construction and renovation projects on various government properties and on tourism projects. In the past, when such gargantuan surpluses did not exist, the legislature paid for such projects by issuing long-term debt.

After an initial drop in state tax revenue in 2020 at the start of the COVID-19 pandemic, revenues soared and continued to soar. Threats of a national recession haven’t dampened Mississippi’s tax revenue.

Mississippi is not unique. Federal stimulus funds provided to deal with the coronavirus have helped boost tax collection in nearly every state. In addition, higher wages have provided states with more revenue from income taxes. And inflation has also provided states with more revenue, especially for more sales tax-dependent states like Mississippi.

After all, a 7% sales tax on groceries now generates more revenue for the state because groceries cost more due to inflation. The same can be said for car sales and just about every other retail item affected by inflation.

In the 2021 session, lawmakers failed to take into account the impact of inflation when budgeting. Most organizations received small increases in funding or no increase at all, except for specific purposes. But in reality, gas and various other items that schools and public bodies have to buy have increased due to inflation. If the Legislative Assembly does not provide funds for these increased costs during the 2023 session, many schools and other public bodies could struggle to make ends meet.

Legislators have no excuse not to fund these inflationary needs. No doubt the Legislative Assembly will have the necessary surplus funds to do so.

This analysis was produced by Mississippi Today, a nonprofit news organization that covers state government, public policy, politics and culture. Bobby Harrison is the senior reporter for Mississippi Today’s Capitol.