Bryant’s Tax Cut Won’t Stop Spending Growth

Did you catch the drift of the news stories about the extra money the Legislature expects to have for next year?

Andrea Williams, WTOK-TV, “Next year Mississippi lawmakers will have more money to spend.”

Bobby Harrison, the Daily Journal, “The Mississippi Legislature will have $170 million more to spend during the 2015 session.”

Iris Barnes, SuperTalk NewsMS, “The Mississippi Legislature will spend $5.63 billion on state services during the 2015 session. That’s $170 million, or 3 percent, more than it did last year.”

Got more, spend more, that was the message.

Governor Phil Bryant had a different message…sort of.

He proposed to give $79 million back to taxpayers. Like some other Republican governors, me modeled his tax cut after the federal Earned Income Tax Credit. The benefit would vary with family size and income. Families with three or more children making up to $52,427 would get the maximum. A single childless person making less than $14,590 a year would get the minimum. The average benefit would be about $250. In years when state revenue grows less than 3 percent or the state’s rainy day fund is less than full, there would be no tax benefit.

“We believe now it is time to give tax relief to the working men and women of Mississippi,” said Bryant.

Lieutenant Governor Tate Reeves has also called for a tax cut, so expect something like Bryant’s proposal to pass next year.

Still, even with Bryant’s tax cut, state spending would go up. Like kudzu, it just grows and grows.

How ironic is it that virtually every Republican in the statewide office and the Mississippi Legislature wants, no demands, that the federal government cut spending, but has no problem increasing state spending year after year?

Since rebounding from the 2008 to 2010 recession, state general fund appropriations have increased every year as shown below:

  • FY2011 General Fund Budget $4,490,653,122
  • FY 2012 General Fund Budget $4,628,263,060
  • FY 2013 General Fund Budget $4,751,849,038
  • FY 2014 General Fund Budget $5,050,081,966

Indeed, over the past nine years general fund appropriations have increased 37%, from $3,697,728,630 in FY 2005 to $5,050,081,966 in FY 2014.

In comparison the national Consumer Price Index increased just 22%. Per capita personal income in Mississippi increased only 26%. Meanwhile, Mississippi’s poverty rate increased from 21% to 24%. You would think there would be a closer correlation between these numbers and state spending.

If state appropriations were linked to the growth rate of per capita personal income (26%), the state would have to give back to taxpayers $560 million of the FY 2015 revenue projection.

Compared to that, Bryant’s tax cut is a drop in the bucket. But, while modest, such a law would provide a vehicle for more significant tax cuts in the future.

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