GOP Leaders Want Tax Reform in MS

Democratic officials panned move as ironic

While praising and defending their fiscal record over nearly five years, Mississippi’s top Republican leaders on Thursday announced an ‘effort to move toward comprehensive budget and tax reform’ by creating 14 new legislative study panels.

‘Reform is on the way,’ said Gov. Phil Bryant, at a news conference with House Speaker Philip Gunn and Lt. Gov. Tate Reeves. ‘… This is a courageous effort. Any effort at reform in government takes courage from political leaders.’

The Republican leaders said the bipartisan legislative working groups will look for fat to trim in state government and study state tax laws and propose an overhaul.

Democratic leaders panned the move as ironic — a call for reform by those who’ve been in charge for years — and say GOP leaders are trying to create political cover for state budget woes caused in part by corporate tax breaks.

Republicans counter that state budget problems are from an economic slump, tax cuts will promote growth in the long run and there’s still plenty of fat in state government, which the new committees will find. Gunn has led the move for the joint House and Senate ‘working groups’ and fiscal reform, first discussing the idea as the regular legislative session ended in April. Gunn said Thursday that he expects the groups to make recommendations to the full Legislature in the 2017 session, but that some work, such as a tax policy overhaul, may take longer.

The tax study group is expected to broach the issue of a tax increase for road and bridge maintenance, an issue pushed by state business leaders but which had little traction with the GOP majority in the Legislature this year.

‘This year we received proposals pertaining to a whole host of tax ideas,’ Gunn said, ‘— sales tax diversions to cities, eliminating grocery taxes, income taxes, franchise taxes — you name it, we have had proposals across the board. We think there needs to be a comprehensive study on how these things work together, how raising one tax and lowering another impacts the revenue stream, for example. Also, we will consider proposals for roads and bridges. What we favor is tax relief for citizens, for creating a steady revenue stream for roads and bridges and a solid plan for maintaining roads and bridges, and eliminating wasteful spending.’

Reeves said he envisions the work will be focused on ‘growing the size of our economy and not on growing the size of our government.’ He noted that when he took office in 2012, he championed a moratorium on state agencies buying new cars that saved $9 million. He said the new committees can likely find similar cost savings in many areas of state government.

The three Republican leaders were emphatic that the need for comprehensive fiscal reform is not because of flagging state revenue and projections. To balance the budget, the governor and lawmaker have had to draw about $110 million from the rainy day fund and slash most agencies’ budgets. Critics blame at least part of this on more than $760 million estimated in tax cuts — mostly for corporations — the current legislative leadership has approved over five years in more than 40 separate measures. This includes a $415 million cut — the largest in state history — in corporate franchise and individual income taxes to be phased in over more than a decade starting in 2018.

Bryant said the Council of State Taxation and Forbes magazine have praised Mississippi’s phase-out of the corporate franchise tax. This is a $2.50 tax per $1,000 of a business’ capital that most surrounding states don’t have and critics say thwarts economic development by ‘taxing success.’

Gunn and Reeves will co-chair the new tax study panel, whose 18 members were announced Thursday, including five Democrats. Gunn said it’s possible the group will recommend un-doing recently passed tax cuts such as the corporate franchise one. Reeves said he doubts that would happen.

Other committees will focus on spending by the state’s largest agencies, the departments of: Transportation, Health, Mental Health, Human Services, Corrections, Public Safety and Education and the Division of Medicaid, Institutions of Higher Learning, community colleges, boards and commissions, state facilities and information technology. Reeves said these new panels will be able to take a ‘deeper dive’ into agency spending — on things such as travel — than lawmakers are able to do during regular annual budget sessions.

‘For instance, the Department of Mental Health is an agency that has done a lot of complaining to you all (media), and talked about shutting down beds,’ Reeves said. ‘But they’re doing that just a year after spending $1 million on office furniture.’

The Mississippi Democratic Trust in a statement Thursday said the reforms will likely bring ‘another illfated attempt at corporate handouts.’ House Democratic Leader David Baria, D-Bay St. Louis, on Thursday said: ‘Frankly, I think this is an effort for (GOP leaders) to provide cover for the budget mess they have created. I believe it shows their understanding … that the people are taking notice of it…”