Hosemann asserts State Economist isn’t always accurate on estimate numbers as members move to adopt new revenue estimates at almost $6.8 billion. 

At the cusp of conference weekend, the Joint Legislative Budget Committee met on Friday to present and adopt the State Economists’ new revenue estimates for FY 2022 and FY 2023.

This adoption of a new estimate is a procedure to be completed before final adoption of revenue and appropriations bills. Lawmakers face a conference report filing deadline for the money bills on Saturday at 8:00 p.m.

Not only were new budget estimates adopted, but Speaker of the House Philip Gunn announced that by noon a new conference report would be filed by the House. The new report would encompass Governor Tate Reeves’ income tax cut proposal he made public on Thursday. The report is expected to mirror the Governor’s plan.

READ THE GOVERNOR’S PROPOSAL HERE

In November 2021, state Senators and Representatives adopted a revenue estimate for FY 2022 of $6.1 billion with an operating budget that typically is set around $5.8 billion; FY 2023 was recommended at $6.4 billion.

State Economist Cory Miller appeared before the members of the JLBC on Friday, saying the estimation committee met last week and proposed that the new FY 2022 budget estimate now be set at $6.87 billion and FY 2023 at $6.9 billion.

Following the presentation, Gunn announced the move to add the Governor’s elimination plan to the conference report and said the numbers left no reason not to move forward.

“This leads me to my last number, which is zero. That’s the number of reasons left as to why we cannot do income tax elimination,” said Speaker Gunn.

Gunn added that everything presented by Miller on Friday shows that now is the time that the state can provide tax relief to Mississippians.

Until today, House leadership has gone on record saying they expected estimates to rise closer to $7.1 billion, which would give ample cushion for their proposed income tax cut plan. Gunn said his position to do that still remains, and he still believes the economists’ estimates are low.

In speaking to the press, Lt. Governor Delbert Hosemann remained skeptical that there was wisdom in eliminating the income tax with such a swift proposal, considering that revenue estimates are often inaccurate or unpredictable.

“Y’all heard us ask him [Miller], ‘Where are we going to be in two years?’” said Lt. Governor Hosemann.  “He doesn’t know. In fact, he was wrong the last time and then we have a $400 or $500 million move this time. With all due respect, other than God, nobody really knows what the next two or three years are going to be.”

Hosemann said he is, and has been, in favor of eliminating taxes, but wants to move in a conservative way that will not require the Legislature to come back to the taxpayers in a few years and say “oops.”

State Economist Miller said there were several factors that could have impacted the increase in revenue this fiscal year, the largest amount coming from sales tax collections. Those included personal income increases of 7.2 percent, most of which was due to transfer payments. Wages and salaries also grew in FY 2021 and FY 2022. He said all sources of revenue are up in FY 2022 as opposed to FY 2021.

Miller added that inflation is the primary concern as of late. It has increased 4.7 percent, which was the largest increase since 1990. Russia’s invasion of Ukraine has also had an impact on forecasters’ estimates.

Going into FY 2023, Miller said their data indicated that revenues would continue to grow at a moderate rate since individual income will not be as supplemented due to transfer payments ceasing.

Highlights for Mississippi’s economic forecast and 2021 data:

  • State’s economy rebounded in 2021, like others in the nation
  • Real GDP increased 4.5 percent, which marks the largest increase in the state since 1995.
  • Estimates say that the GDP will increase 1.5 percent in FY 2022.
  • Payroll employment increased 2.5 percent in 2021
  • Both initial and continued unemployment claims were below their pre-pandemic levels two years ago.

Prior to the adoption of the new revenue estimates, several Senators asked if by recognizing these estimates did it obligate them to do anything in the budget up to that number. According to staff lawyers, there was no obligation, just a recognition of the new estimates. No numbers will be changed based on the adoption.

House members like State Rep. Jason White continued to urge that these numbers are likely still low and expect higher than what the estimates show.

House Bill 531 is in conference as subject to the Saturday 8:00 p.m. deadline.

Governor Reeves mentioned Thursday that if an income tax cut proposal is not adopted by the Legislature it is likely he would call them into a special session to address it.

“It is time to send that money back to the taxpayers,” Reeves said. “It is time to let people keep more of the money that they’ve earned.” 

State General Fund Revenue Estimate FY 2022 Revised and Revised FY 2023 by yallpolitics on Scribd