The turning of the year is traditionally a time to look ahead. For state government that “look ahead” horizon tends to be pitifully short. Especially when it comes to finances.
In 1999, times were good. So good the Legislature revamped the state retirement system (PERS) to spread the wealth to retirees. Not just future retirees. Expanded benefits were backdated to cover existing retirees too.
Oops. Twenty-three years later, that generous expansion is costing the state dearly. The PERS board in December jumped the employer contribution rate by five points to 22.4%. It was the fourth such increase since 2011 when the rate was 12%. Each time previously PERS promised the increase would resolve PERS’ funding shortfalls. Each did not. So we get the largest jump ever this year.
Also, in 1999 state leaders created the Health Care Trust Fund. Annual tobacco lawsuit settlement funds – forecast to be $4 billion in 25 years – were to be deposited into the trust fund and remain inviolate. Only investment earnings were to be expended.
Oops. It didn’t take long for the first violation to occur. “In 2005, legislation was passed to take $240 million from the trust fund to plug a Medicaid deficit,” explained Bobby Harrison in a Mississippi Today article. That withdrawal and future ones were supposed to be repaid. Instead, the trust fund was depleted. The Legislature deleted the “inviolate” language from the law in 2013.
Times are again good in 2023. Gov. Tate Reeves, House Speaker Philip Gunn, and their allies have looked ahead and believe times are so good the state can afford to fully abolish personal income taxes.
The move would wipe out about $2 billion of state revenue a year. Lt. Gov. Delbert Hosemann has voiced his concern saying it could “risk the future of Mississippi.” Instead, he has proposed a one-time rebate to state taxpayers of up to $500 each, a tactic used by many states with flush coffers.
An editorial in the Northside Sun also called for caution. “There are too many unknowns to eliminate the income tax, including how previous tax cuts will play out,” it said. “Mississippi has many issues that need addressing. Most of them require money. It would be foolhardy to squander this opportunity to fix some of those problems.”
Meanwhile, as happened after 1999, financial conditions have begun to change.
Inflation has surged. State Auditor Shad White issued an “alert” to state leaders. “The buying power of the dollar has dropped 13% since January 2020. Taxpayers will continue to pay more for less – at home and in government offices.”
Interest rates are up. A recession looms. And that 5 percent jump at PERS will cost the state an additional $265 million per year.
Perhaps a look behind might help inform a look ahead.
“The wise are cautious and avoid danger; fools plunge ahead with reckless confidence” – Proverbs 14:16.
Crawford is a syndicated columnist from Jackson.
21 comments:
We keep electing egomania idiots to sit in that domed building when not out drinking at night. It might be beneficial for the higher end bars and restaurants, and beneficial to special interest groups, but all that is really assured is that Mississippi ranks 50th in economic terms.
Increasing property taxes, based on true market value, is how TX eliminated income tax. From what I've experienced, there is little difference between TX grocery sales tax cost and that of MS. Beer and liquor is overall cheaper and available in warehouse stores for Costco-like prices, or less.
Rent in Austin can be $1,500 a month for a 425sf-450sf studio apartment.
Though income tax elimination works to draw business relocation to TX, property taxes are so mean that it is common for home owners to hire appraisers to lower the values of homes in order to make appeals, which take time and are often unsuccessful.
TX property values are dropping slightly after a long bubble, but in prime markets are still about 2 to 3 times MS's best markets for similar properties. $1M in Madison = $2+M in Austin, Dallas areas.
TX also uses cameras to determine automatic tolls for certain expressways and bypasses, then sends bills by mail. This is fairly priced and a very effective way to maintain highway budgets.
MS should get P-Gunn to shepherd a bill to reduce the number of counties in MS, thereby reducing county government by almost 1/2.
Make the State pay costs for changing recorded platt, property and other records. Only a few Counties, like Hinds, Madison and Rankin, are big enough to justify not being fused with a neighboring county. Make the county with a smaller GDP accept its neighbor's name for records.
There are hundreds of thousands of retired persons living in this state who would not receive a dime under Digbart's $500 refund plan.
Income tax confiscation is not the reason we have the surplus. Why refund/rebate the surplus to those having taxable income in the past two years? That makes less sense than Dolbert's secret, yet successful, plan to furl the flag.
Mississippi "ranks" last because of its citizens' low educational levels (black, brown, white, etc.) which translates to financial, economic, and political illiteracy.
It's why the same dirt dumb rednecks keep getting elected and then swindling citizen tax dollars away instead of securing Mississippi's future. Mississippi "government" is nothing but a bunch of good ole' boy/girl connections that will eventually lead to the financial collapse of Mississippi if they remain in a culture of indifference to where their money goes.
Meanwhile, MDOT is so underfunded that they can barely afford to do maintenance on state highways and have no $$ for new construction. Our State gas tax hasn’t been increased since 1989. The value of that 18.5 cents per gallon is about 1/3 of what it was in the 80’s and construction costs have more than tripled in the last 34 years. But keep on playing games with the state budget and watch our state highways start to resemble Jackson’s streets.
10:30 - I retired from a corporation which held that if you bring up a problem, you offer a solution. You ever heard of that?
It's the hallmark of people like you to chirp and chant, rave and rant....but you never offer a solution or any positive contribution.
Please...carry on.
The irony is that even no sales tax will attract the kinds of corporate investment that would make up the loss. Nor can you raise property taxes without to an amount that would make up the difference.
Aside from the penchant to give away land, there's 16 section land and that they can't exceed the actual market value of the property.
But, our legislature is incredibly math challenged.
It has been reported that 75% of MDOT field workers will soon be let go. Why? Because someone invented a shovel that stands up all by itself.
To 2:17 PM - Oh, my "hallmark" would be speaking to the pink elephant in the room that everyone knows about but isn't willing to say is there - so I say it. Then you usually get silence, because everyone's so afraid to speak the truth of getting fired - that happens in corporate offices plenty.
Mississippi's "educational" system is a farce. It's a giant jobs program (for Bubba, Betsy, and Lucinda Dawn, our cousins and in-laws) and merely a vehicle to redistribute tax dollars to special interests. Nothing more. Also, the brain drain is real...and will take its toll eventually.
Citizens get the government they deserve, and until enough of them get their head out of their Bible (supposedly) and get wise as to how their tax dollars are being spent, they'll continue to fall for the short-sighted, yet well-engineered machinations of Haley Barbour and the white supremacists that run Mississippi. The problem is the poor kind of like Haley and those folks who act just like how those folks of the white citizens council of old acted in keeping the poor down, down, down.
Bill Crawford sounds like a communist most of time, but on this article - he's spot on. Mississippians seem to forget about the many hundreds of millions lost every few years, then vote for another idiot that stands for nothing except keeping the gravy train going in the direction of the already well off. Think Bryant, Reeves, White, Fitch, Hosemann, Gunn, Watson, Presley, etc.
All are in on the grift, and cover for one another. And big brother Haley works the electioneering to keep it that way...otherwise the poor are going to take over the Big House, and they know it.
Mississippi's infrastructure is crumbling on many fronts, it's only a matter of time - the rot is already visible - and like many of Mississippi's neglected bridges - it will itself implode because of "leaders" with zero backbone to inform and educate the masses.
Dear Genius @10:08 - Texas has NEVER had an income tax.
January 1, 2023 at 2:17 PM, people, like 10:30, aren't problem solvers. They are ego challenged. Their self-esteem is so low, that they must continually pull down others.
They are egg sucking egg throwers that rise up from their gutter position, look down their long pointed nose, while attack anything, and everything.
As country folk used to say, they are backstabbing, blood sucking, hen house robbing, dog stealing, rusty kneed, goat smelling, knuckle draggers, that wouldn't amount to a pimple on a good person's ass.
Whatever you do, don't loiter around the roads and interstates at the state line. You risk being trampled by the hordes of young professionals from Austin, Nashville, Atlanta and elsewhere who have heard of our tax cuts and can't wait to get in on the economic bonanza that is sure to follow.
2:24 - I suspect you're that jerk who cruises through a highway construction zone doing 76 when signs state 'fines doubled when workers' present'.
5:03pm
In 2019, even though TX did not have an income tax, the State voted to constitutionally ban it. This act relieved threat from Democrats who want income tax in TX.
My point @10:08am was TX uses property tax to make up for for no income tax. MS should publicly discuss increased property tax ramifications not just sing praises of eliminating income tax.
@2:24
MDOT outsourced those jobs to APAC, Superior, Hemphill, etc.(whoever bids the lowest) long ago. Now MDOT just inspects their work. You need new jokes!
There’s a huge difference between Texas and Mississippi goes all the way back to the founding of each state. Texas was founded by individuals who carved out a living by building forts and killing or being killed by Santa Ana or horse mounted Plains Indians (mostly Comanche) while Mississippi was founded by a bunch of drunken Scots-Irish slave owners who only faced docile agrarian Choctaws. This is extremely evident when you see the state of Mississippi farms, run by the same descendants, compared to Texas, Arkansas, Kansas, or Missouri farms. Our farms looks like lazy, cobbled together shit.
Eliminating taxes in a declining economy shouldn’t hurt .
Hello there 9:57 - Exactly what WAS your major at Milsaps?
4:38 I am conservative and I was with you on the, being sick of the good ol boy Haley machine being our ruin.
And the useless education system that is nothing more than an employment service.
But you lose credit when you imply this is only the Bubba's of the world in MS that are guilty.
I am sure you know the Bennie's of MS are just as guilty and JPS is leading the back in nepotism and useless admin hires.
@4:08pm Of course that's true about the Bennies....but there are infinitely more Bubbas and Lacey Dawns. You know this.
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