Mississippi House Speaker Philip Gunn signaled that he will not follow through on threats to make the use of $1.8 billion in federal relief funds dependent on the success of his push to eliminate the state income tax.
President Joe Biden signed the American Rescue Plan Act last year, which sent the money to Mississippi to provide economic relief, including assistance with hospital shortages and infrastructure repairs throughout the state.
“We certainly want to help our cities and counties. We don’t have any problem going forward with appropriating the ARPA funds in accordance with the House position. We have our own ideas as to how those funds should be spent, they are very conservative (ideas),” Gunn, a Republican, told reporters during a press gaggle Wednesday afternoon without detailing how he wants to spend the federal funds.
Earlier this month, Mississippi House Speaker Philip Gunn said he wanted the Senate to join the House’s effort to eliminate the state income tax “before we spend a dime” of the federal ARPA funds, which the Mississippi Free Press reported on March 3.
In an MFP Voices piece Monday, the state’s Republican lieutenant governor, Delbert Hosemann, warned that the state could lose the funds and the chance to make vital investments, such as repairing ailing water systems, if the state does not spend them soon.
Gunn Offers New Tax Elimination Plan
Speaker Gunn stepped back from threats to withhold the funds as he announced a less ambitious plan for cutting taxes. Instead of ending the state income tax by the early 2030s, the new plan would slowly phase it out, reducing state revenue by $100 million a year over a roughly two-decade period “until it’s gone,” Gunn said Wednesday.
“Right now, we have about $1.5 billion in excess revenue. Given the pace we’re on, we’re going to end up with about $2.5 billion in excess revenue,” he explained. “We clearly believe that shows that income-tax elimination is feasible. We have provided to the Senate at least four different proposals on plans to eliminate the income tax. Today, we are delivering yet another one.”
Gunn is the immediate past chairman and current board member of the American Legislative Exchange Council, a conservative organization that provides template legislation to statehouses across the U.S. ALEC has long called for eliminating state income taxes across the country, including in Mississippi.
The effort has raised concerns that doing so could eliminate key public funds, such as for education, with potential disastrous results like Kansas experienced when that state repealed its state income tax before reversing course.
Gov. Tate Reeves supports the effort to eliminate Mississippi’s state income tax, but wants it to happen more quickly than under the latest proposal. He offered his own plan on Thursday, tweeting that the Legislature should “reduce the marginal tax rate by an additional (very small and safe) 0.5% for the next seven years to eliminate the income tax!”
“Anything less in year one is too little and any phase-in longer than that is too late,” he wrote. “Let’s get this done!”
Lt. Gov. Hosemann, who is also the Mississippi Senate president, did not endorse the House’s latest plan in a statement Wednesday, though. Earlier this year, the Senate passed a tax-cut plan that would have cut income taxes by $439 million. The Senate plan would cut the state’s grocery tax.
“During the many hours we have spent with the House on this issue we have not said we do not support ever eliminating the income tax in Mississippi. We can address further cuts at any time,” the Republican lieutenant governor said. “Taxpayers expect us to be responsible stewards of tax dollars. The Senate’s plan includes cutting taxes and taking care of core government services—not gutting them.”
‘Not Elected To Grind Government To A Halt’
In his statement, Hosemann also urged the House to work with the Senate to address agency budget issues, warning that without adjustments from December’s Legislative Budget Recommendation, a variety of vital services could go unfunded.
“Normally, agency budgets finalized at the end of the Session address deficits, new programs, court costs, and other necessary expenses. Without any adjustments from LBR, there will be no funds for the new state trooper class and no trooper raises. No new fire trucks for rural communities,” Hosemann said. “No new funds for Corrections, even though the agency is embroiled in a federal lawsuit. No match money for the federal infrastructure bill which helps maintain our roads, bridges and water systems. No public school, community college, or university building funds.
“None of us were elected to grind government to a halt. We will not conduct ourselves this way in the Mississippi Senate. We will continue to work and call for public conference committees on the budget and other general bills.”
During Wednesday’s press conference, Gunn said the House does plan to work to address the budget even as it seeks to phase out the state income tax.
“Our budget moving forward is going to reflect a very conservative approach until such a time as we can give the taxpayers some tax relief,” he said.