DALLAS – Some Democrats in the Mississippi Senate want their colleagues to void a tax cut that was approved earlier this year and redirect the revenues to state roads and bridges.
Repealing the cut in the business tax, which has not yet gone into effect, would provide $6 billion for the state's transportation needs over the next 20 years, said state Sen. David Blount.
"I think everyone knows we have a crisis, and what has been missing so far are specific proposals on how to address that crisis," Blount said at a news conference on Monday. "That one simple thing [repeal of the tax cut] will generate more than $6 billion for infrastructure without raising a nickel in taxes on anyone."
Repealing the tax cut before it goes into effect in 2017 should not be considered a tax increase because no one has paid it yet, Blount said.
"We believe this would be the most important and necessary first step toward addressing the infrastructure needs in our state," Blount said.
The 2016 legislature passed the largest tax cut in Mississippi's history, a phase-out of the state's business franchise tax that now brings in $260 million per year. Lawmakers also cut state income taxes by $145 million per year and lowered the tax on the self-employed by $10.2 million per year.
Eliminating the business tax cut is fairer than raising Mississippi's current fuel taxes of 18.8 cents per gallon of gasoline and 18.4 cents per gallon of diesel, which have not gone up since 1987, Bryan said.
"We believe this is a necessary and essential first step in generating revenue and maintaining tax fairness for the middle class," he said.
More than 90% of the businesses subject to the franchise tax pay less than $1,000 per year and more than 85% are not even located in Mississippi, said state Sen. Hob Bryan.
"If you take that same amount of money and put it in a fund by itself, then we could make enormous strides," Bryan said. "We could make a dramatic impact in improving our transportation and infrastructure."
Lt. Gov. Tate Reeves, a Republican who shepherded the tax cut through the 2016 legislature, is opposed to the Democrats' proposal to eliminate it, said spokeswoman Laura Hipp.
"Lt. Gov. Reeves believes raising taxes on either Mississippians' income or employers' investment in the state will hamper long-term economic growth," she said.
The state should consider regular bond issues for the $158 million per year needed for highway expansion projects while using current revenues for road maintenance may be an option, said Mike Tagert, one of three members of the Mississippi Transportation Commission.
Raising the gasoline tax is the best way to fund transportation, said transportation commissioner Tom King.
"I believe that now would be the time to increase the fuel tax," King said. "That's the simplest, cleanest way to do it."
Melinda McGrath, executive director of the Mississippi DOT, told legislators last month that the state needs $526 million per year of additional transportation funding over the next 10 to 15 years to replace the state's deteriorating bridges and bring roads to a good condition.
"The situation is dire," McGrath said.
Federal funding accounts for 43% of Mississippi DOT's annual budget, with 25% provided by state fuel taxes and the remainder from vehicle registration fees and other taxes.
Mississippi will receive $2.56 billion of federal transportation funding through fiscal 2020 from the Fixing America's Surface Transportation Act, an average of $512 million per year.
