Kudzu Government Will Tax Its Way Back

Hack. Slash. Cut.

Government continues to lay off, furlough, and reduce spending. Beneath this frenzy, however, seeds of re-growth are taking root.

Government is so much like kudzu. You can trim it, cut it back, hack it up, but it grows right back. Only by yanking it out root and crown can you kill it. And, there have been no root and crown kills so far in Mississippi.

Much of this re-growth will occur whether the economy rebounds or not.

Universities planted seeds of re-growth last January when the College Board approved a two-year double-digit tuition hike. Likewise, local boards approved double-digit tuition hikes at most community and junior colleges. Only Itawamba Community College has held the line. Tuition, a sort of indirect tax, does not require legislative approval to go up. Nor does the state of the economy matter.

Schools, which enjoyed lesser cuts than universities and colleges, will soon be sending tax increase requests forward to undo cuts. State law allows school boards to raise taxes without legislative approval and only perfunctory review by city and county government. These increases will drive up tax rates on real and personal property.

They have not received as much attention, but cities have had to hack and slash too.

City cuts result from decreased sales tax revenue. Still to come are impacts from property tax shortfalls. It can take up to two years for property value decreases to show up on city and county tax rolls. That’s why little has been written about shortfalls in county government.

With state sales tax revenues projected to be flat, cities can be expected to raise property tax rates to offset revenue losses. Tax increases will vary from city to city.

At some point, falling property values will impact county tax revenues. Expect counties to increase tax rates over a period of time since county schools, community colleges, and county budgets all get revenue from county property taxes.

And, then, there’s the state. Already, seeds are taking root to bring a tax increase proposal before the Legislature. Once again, this request will be on the backs education, even though any increased revenue will find its way to all sorts of agencies and programs.

Tax increases have to happen unless an economic miracle restores revenue – because no lasting cuts to government have occurred. None of the bold proposals by Governor Haley Barbour to rightsize government took hold. Nothing got yanked out root and crown.

Startling has been the lack of serious business support for the Governor’s proposals. Even the Mississippi Economic Council, long a loud business mouth for rightsizing government, has kept quiet.

Kudzu government is not business or taxpayer friendly.

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