Philip Gunn and Delbert Hosemann remain at an impasse on tax cuts

by Geoff Pender, Mississippi Today
March 15, 2022

The Mississippi Senate passed a new tax cut bill Tuesday, the day after the House passed its newest version of a bill to eliminate the state income tax.

Both Republican-led chambers billed their changes this week as compromise. But the two are not openly negotiating and appear to mainly be communicating through press conferences hyping their own plans and criticizing the other’s and sending dueling bills back and forth.

The two chambers remain far apart on tax cuts as the 2022 legislative session enters its final three weeks. The impasse threatens to hinder setting a budget, spending billions of federal pandemic stimulus and other work. It also raises the specter of an extended or special session into the summer.

Republican Speaker Philip Gunn and his House leadership are set on eliminating, not just cutting, personal income taxes. But Republican Lt. Gov. Delbert Hosemann and his Senate leadership believe that’s too risky and propose smaller tax cuts, rebates and suspension instead. House leaders say the Senate plan is a half measure. Senate leaders say the House is being foolhardy trying to eliminate one-third of state revenue during uncertain economic times.

After a public speech at the Capitol on Tuesday, Gunn — flanked by dozens of House members — called for Hosemann and Senate leaders to “get into a room and talk with us about this” to come up with a deal. But Gunn also made clear he’s dug-in on “elimination of the income tax, without further legislative action required, and as quickly as possible.”

Gunn also called for Republican Gov. Tate Reeves, who is currently out of state, to throw his full support behind the House plan. “(Reeves) has said he supports eliminating the income tax, and this is the only measure to do that,” Gunn said.

“This is the opportunity of a lifetime, ladies and gentlemen,” Gunn said in his Capitol speech. “… This is the opportunity to do something right now that we will never have again in our lifetimes.”

READ MORE: 5 things to know about the Great Mississippi Tax Cut Battle of 2022

But Senate leaders have countered that there should be plenty of opportunities down the road to cut or eliminate taxes — depending on what the economy does.

“This is very fragile right now, and we are at risk — with Ukraine, inflation …” Hosemann said.

On Monday, Hosemann held a press conference where he announced a proposal to suspend the state’s 18.4-cents-a-gallon gasoline tax for six months and expansion of the Senate’s income tax cuts, but not elimination.

“We need both meaningful and sustainable tax reform,” Hosemann said.

While some Democrats in both chambers are voting for the tax cut bills, others question whether tax cuts are in order for a state with so many needs in roads, water and sewerage and education.

“It just seems like we’re stumbling backwards into the future, trying to impress somebody with tax cuts, when we need to be doing so many other things,” said Sen. David Jordan, D-Greenwood.

READ MORE: Tax cut battle continues: Hosemann wants to pause gas tax, House overhauls its plan

Here are highlights of the House and Senate’s latest proposals on taxes. To see earlier iterations of the plans, click here.

The House tax plan

• Eliminate the state personal income tax, through exemptions, over years. It would start with exempting $25,000 in income for individuals, $50,000 for married couples — down from its previous proposal of first-year exemptions of $40,000 and $80,000 respectively. The first year the plan would cut about $700 million from the state budget, eventually increasing to about $1.5 billion.

• Phasing out the rest of the income tax using a “growth trigger” of 1.6% a year. This means state revenue over 1.6% growth would be used to buy down the income tax. This buy-down would be capped at $150 million a year, meaning money collected over that amount would stay in the state budget. Previously, the House growth trigger was at 1.5% with no cap. The latest proposal would take about 15 years to eliminate the income tax, up from about 10 years in its previous proposal.

• No sales tax increase. The House has since last year pushed for sales tax increases to go along with its income tax elimination. But this week it dropped that part of its proposal.

• Reducing the grocery tax more slowly, from 7% to 4% at a quarter point a year.

• No car tag reduction. The House had proposed cutting car tag fees in half, using state funds to subsidize local governments who levy most of the fees on car tags. House leaders said the Senate opposed this, so they dropped it, despite it being popular with constituents.

• Setting aside $500 million in state funds to cover any budget shortfalls “out of an abundance of caution” and to allay Senate concerns that the House plan would sink the budget.

The Senate tax plan

• Reduction of the state’s top, 5% tax bracket to 4.6% over four years, then elimination of the lower 4% tax bracket over the next four years after that. Originally, the Senate had proposed only the phase out of the 4% bracket. The new, eight-year Senate tax plan would cost about $439 million a year when totally implemented.
• Suspending the state’s 18.4-cents-per-gallon gasoline tax for six months, using about $215 million in tax dollars on hand to reimburse the Mississippi Department of Transportation, which uses the gas tax for roads, bridges, and matching federal dollars. House leaders said Mississippians would probably barely notice such a break with gas prices currently so high.
• Reduction of the state grocery tax from 7% to 5%, starting in July.
• Up to a 5%, one-time income tax rebate in 2022 for those who paid taxes. The rebates would range from $100 to $1,000, for a one-time coast of about $130 million.

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.

Nissan will build new electric vehicles in Mississippi, the state where they’re the least popular to own

by Alex Rozier, Mississippi Today
March 4, 2022

The Japanese car manufacturer Nissan announced last month it will spend half a billion dollars to upgrade its facility and workforce at its Canton plant, with the goal of building two new all-electric models by 2025.

“For nearly two decades, Mississippians have kept our state at the forefront of the world’s automotive industry,” Gov. Tate Reeves said. “The announcement that Nissan Canton is shifting some production to EVs (electric vehicles) further positions Mississippi as a leader in this crucial economic sector.”

But it’s less likely Mississippians will be driving those cars compared to drivers in the rest of the country. Mississippi has, per capita, the lowest number of electric cars registered of any state, according to U.S. Census and Department of Energy data. 

Policymakers and businesses around the U.S. are trying to jolt the electric car industry, with the hopes of emitting less carbon into an already warming atmosphere. The transportation sector accounts for the largest share of greenhouse gas emissions in the country — about 30%, according to the Environmental Protection Agency. 

In Mississippi, one of a few states that doesn’t require emissions testing for vehicles, only about 3 out of every 10,000 people own an electric vehicle. For the country as a whole, there were about 1.8 million EVs registered in 2020, or about 55 per 10,000 people. 

The state’s charging supply is also low compared to the rest of the country, ranking second to last, ahead of only Louisiana, in electric charging ports per capita. 

New federal dollars coming to the state will soon change that. Mississippi is set to receive $50 million from the Infrastructure Bill that would pay for charging stations and establishing corridors across the state for electric car drivers to use. The state has until August to submit a spending plan, according to a spokesperson from the Mississippi Department of Transportation, after which it can receive the money. 

While electric cars are getting cheaper, they’re still about $10,000 more than the average car. The federal government offers a tax credit worth up to $7,500 for EV purchases. 

Thirty-one states offer incentives, such as a tax credit or rebate, for purchasing an EV. Mississippi doesn’t have such a program, although the state’s largest power company, Entergy MS, does offer a $250 rebate for customers who buy a charger, which costs about $2,000.     

Other than that rebate, the state hasn’t done much to encourage drivers to make the switch. In 2018, the Legislature passed a bill that charges electric car owners to pay an $150 annual fee, and $75 if they own a hybrid, although the fees have increased since with inflation. 

While some electric car owners and advocates in the state scoffed at the law when it went into effect, most of the country has a similar policy.

Rep. Charles Busby, R-Pascagoula, who wrote the bill, argued that the fees are fair because the state relies on gas taxes to pay for roads and bridges. 

“If they’re going to travel on those roads and bridges they need to make a contribution,” said Busby, who chairs the House Transportation Committee. 

Busby added that he didn’t see a need yet to give customers an incentive for buying EVs, and that the market should dictate what cars people buy.

“Obviously if we transition towards electric vehicles, I want that to be supported in the state of Mississippi,” Busby said. “So I am for that, but I don’t think that we ought to be in the business of promoting one over the other. It needs to compete on the free market by itself.”

Failed attempts to encourage EVs in the state include a bill last year that would have given up to $30 million in tax credits for businesses that build charging stations, as well as several attempts to repeal the 2018 annual fee. 

In addition to the $500 million Nissan is investing in the operation, the Mississippi Development Authority is also spending $50 million through grants on the project, an agency spokesperson told Mississippi Today. 

The money will go towards building improvements, installing new equipment, and upskilling 2,000 of the 5,000 workers at the plant. 

Mississippi Today reporter Sara DiNatale contributed to this story. 

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.

Senate wants to spend $300 million on emergency bridge, road repairs

by Geoff Pender, Mississippi Today
February 25, 2022

The Senate has unanimously voted to add $300 million to the state’s Emergency Road and Bridge Repair Program.

The proposal, which could speed repair of more than 200 bridges statewide that are closed and/or posted for structural problems, now heads to the House.

“Right now, we have millions of dollars in federal relief funds flowing through our economy,” said Lt. Gov. Delbert Hosemann. “Our cities, counties and constituents have asked us to dedicate our resources to better maintaining our infrastructure. We are listening and hope to send this legislation to the governor posthaste.”

But the legislation is also likely to get hung up in House and Senate debate over major income tax cuts and other spending decisions.

Senate Bill 3167, authored by Senate Appropriations Chairman Briggs Hopson, would direct $300 million of $1.1 billion in surplus state revenue this year into the program. The Legislature passed the emergency repair program in 2018, with hundreds of state bridges in dangerous disrepair, and initially funded it with $250 million in borrowing. Lawmakers spent another $89 million on the program last year.

The ERBR Program is run by the Mississippi Department of Transportation and an advisory board of industry and local government leaders.

READ MORE: Full coverage of the 2022 legislative session

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.