Governor, legislative leaders expect big jump in revenue for 2023 session
Legislative leaders and Gov. Tate Reeves have agreed on a revenue estimate that will result in lawmakers having about $500 million more than last year to spend when they convene in January to start work on a budget for the new fiscal year.
Members of the Legislative Budget Committee, including House Speaker Philip Gunn and Lt. Gov. Delbert Hosemann, met with Reeves Wednesday morning to develop the official revenue estimate of $7.52 billion for the new fiscal year, starting July 1. The revenue estimate used by House and Senate leaders this past April when legislators passed the budget for the current fiscal year was nearly $7 billion.
The 7% increase in the revenue estimate continues a trend of unprecedented growth in tax collections for the state. Mississippi, thanks in part to federal spending and inflationary growth, now has a surplus of more than $2 billion.
The estimate for the upcoming fiscal year, though, based on the estimate made Wednesday, indicates that legislative leaders and the governor believe that revenue growth will be slowing. The new revenue estimate represents only an 0.3% increase over what financial experts believe will be collected in taxes during the current fiscal year.
The estimate was recommended to the legislative leaders by state Economist Corey Miller and four other state financial experts. State law mandates that the governor and members of the Legislative Budget Committee agree on a revenue estimate before the start of each legislative session.
Hosemann, who presides over the Senate, did not oppose the estimate for the fiscal year beginning July 1, but pointed out that a recession is likely.
And a recession could result in a dip in revenue.
In response to questions from Hosemann, Miller said anticipated additional interest rate hikes by the Federal Reserve in an effort to curtail inflation “could be enough to tip us into a (national) recession.”
Reeves and Gunn both have advocated for eliminating the state income tax while revenue collections are strong. The income tax accounts for about one-third of general fund revenue. The sales tax is the only revenue source larger than the income tax, making up about 36% of the general fund.
Reeves told the Mississippi Economic Council during a recent meeting “you have my word that as long as I’m governor I will never stop fighting to fully eliminate the income tax in Mississippi.”
Hosemann has advocated using some of the surplus funds for a one-time rebate to taxpayers.
During Wednesday’s meeting with legislative leaders, Reeves said there is “opportunity there for us to cut government spending to return more money to taxpayers.”
In response to Miller pointing out that state employment growth had stalled this year and was not increasing, Reeves said it is not because of a lack of job openings but because of “the inability and unwillingness of some to enter the labor market.”