A slight downward trend of state revenues continued in May, but the state remains in a solid financial position to fully fund the budget lawmakers set for the current fiscal year in 2023.
However, revenue data may suggest that future legislative goals may face some uphill battles as income tax revenues continue to decline.
What are the state revenue numbers?
According to a report issued by the Legislative Budget Office, the state's fiscal year to date revenue collections sit at $6.9 billion, which is about $17.9 million less than what was collected by this time in 2023.
LBO releases state revenue reports on a monthly basis, reflecting the state's financial position of the previous month and fiscal year to date. Mississippi's fiscal year begins July 1 and ends June 30.
State personal income taxes, as reported by LBO, amounted to $2,040,348,272 for the year so far, which is $155,651,893 less than by May 2023, representing a 7.09% drop. Corporate income tax brought in $819,215,747, compared to $890,963,506 by May 2023, falling 8.05%, or $71,747,758 in just one year.
Despite the downturn in income-tax collections, state sales-tax revenues saw improvement in May. The tax came to $2,571,951,896 by the end of May for this year, showing a 3.14% uptick from May 2023 FYD collections ($2,493,710,426). Other taxes also saw growth, such as the insurance premium tax and use tax.
With a net loss in revenues totaling more than $220 million from personal and corporate income tax alone, state officials might be glad that the interest accrued from state investments has totaled $126 million this fiscal year, $62,048,596 million more than it was in FY 2023.
How do tax numbers line up with Republican goals?
The drop in income taxes is largely due to a phase down of the tax passed by the Mississippi Legislature in 2022, which will be cut down to a 4% personal income tax by FY 2026. At the time, several lawmakers, supporting more robust cuts, said revenue losses from the phase down and future cuts would be offset by sales tax revenue growth.
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As of May's figures, that justification still has not panned out the way Republican lawmakers had hoped.
House Speaker Jason White, R-West, in a May meeting with reporters at the Mississippi State Capitol in Jackson, said he is planning to cut the state's 7% grocery tax in half, phase down the state's personal income tax and find a new way to fund the Mississippi Department of Transportation.
MDOT is currently funded mainly through an 18.4-cents-a-gallon tax on motor fuel.
"Between eliminating the personal income tax cutting the grocery tax, we will probably, of course have to look at sales tax and the way we divert it to cities," White said. "The gas tax we collect on the gallon, you know, is there room there (for improvement)? You're going to see a lot of discussion."
The man who previously occupied White's podium, Philip Gunn, R-Clinton, also attempted to phase out the income tax, but he was unsuccessful in attempting to convince Senate leadership to completely phase it out without further substantial review of the state's tax structure.
Read about White's plan for 2025.MS Speaker of the House Jason White speaks to press on end of session and celebrates with colleagues
When asked if the state could even afford a new income tax cut in light of a historically high $7.9 billion budget, which included a $2.95 billion K-12 education funding package, White said it is doable.
"I think the state can afford reduction," he said. "We continue to run these huge surpluses. Now, we have been spending that money and using it on things like huge capacity projects at MDOT… But as we run those surpluses, there is going to be conversations about tax cuts. Certainly, we want to fund our education system, and I think we have demonstrated that. I'm not saying that throwing money is the end-all-be-all that fixes everything, but I do think in addition to reforms, I think we've shown that we're willing to fund it."
White has also formed a special committee to study the state's tax structure, which could meet in the summer or fall to study the idea further.
Grant McLaughlin covers state government for the Clarion Ledger. He can be reached at gmclaughlin@gannett.com or 972-571-2335.
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