Governor releases budget recommendations for fiscal year 2022

Monday, Mississippi Gov. Tate Reeves announced his fiscal year 2022 executive budget recommendations.

Among his recommendations, Reeves is touting eliminating personal income tax for Mississippians, which is part of a law passed in 2017. As of 2019, individual income tax brought in about a third of the state’s revenue, according to the Mississippi Department of Revenue.

The plan was proposed and passed by the Republican controlled state Legislature in 2017. Now, Reeves is focusing on what the elimination of the roughly $2.2 billion in state revenue would mean to individual tax payers. It would save a Mississippian making $40,000 about $1,850 the governor said in a news release. The phased rollout is expected to be finalized over 10 years, and the maximum tax savings would only be realized at the end of the plan.

As Lt. Governor, Reeves helped pass the Taxpayer Pay Raise Act that began the phase-out of the 3% income tax on the first $5,000 of income. FY 2022, which begins in the fall of next year, is the first year for the 3% income tax to be completely eliminated if all goes according to plan, and Reeves said this is the right time to begin a complete the phase-out of the income tax.

“Because this plan is a phased approach, we will be able to ensure adequate funding will be available for education, law enforcement, health care and transportation priorities,” Reeves said in the statement. “It will not be necessary for us to increase other taxes in order to make up for lost revenue from the elimination of the income tax.”

Republicans are banking on making up the lost revenue by reinvestment such as expanded corporate capital projects and increased production and purchase of goods and services. The tax cut phases would only proceed if the state sees proportional increases in its gross domestic product.

The budget summary also highlights

• additional funding for the Mississippi Law Enforcement Training Academy,
• protecting small businesses affected by COVID-19,
• creating a “Patriotic Education Fund” to counter “indoctrination in far-left socialist teachings,”
• supporting quality education by “limiting funding for school districts unwilling to provide the option” of in-person classes during the pandemic,
• increasing workforce development,
• funding state agencies such as the Mississippi Emergency Management Agency and the Mississippi State Department of Health for their part in the COVID-19 response
• funding the judiciary and
• protecting the integrity of Medicaid through driving down taxpayer costs.

“I remain adamantly opposed to Medicaid expansion in Mississippi,” the governor wrote in his proposal.

Reeves is recommending $2 million to train and prepare teachers across the state in computer science courses to provide K-12 students with coding, cyber training, robotics and artificial intelligence skills. The governor is also recommending $3 million to fund coaches targeting math skills.

“We have seen the success of reading coaches as a tool to boost the early learning for our children. We need to accelerate recent successes in results for math – setting children up for success,” Reeves said.

The governor is also proposing $50 million in one-time funds to accelerate workforce growth. Those funds would be used to facilitate six specific goals as listed in the budget:

1. Modernize and expand community college training programs,
2. Provide scholarships or wage assistance to help low-income citizens get into training programs or apprenticeships,
3. Develop the right industry certified credentials or programs in high-school,
4. Grow Mississippi’s path of IT-based skills,
5. Expand dual credit programs in high-schools, and
6. Incentivize career technical courses in high-schools.

“I have always promised to be a good steward of the taxpayers’ dollars, and this budget reflects that commitment to each of you,” Reeves said.

Overall, Reeves’ proposal is $1.1 billion less than the nearly $7.3 billion budget for the current fiscal year. The savings are realized through essentially cutting programs funded through the $1.25 federal emergency COVID-19 relief bill known as the CARES Act. The proposal’s biggest cuts include taking $200 million from the general education funds for distance learning and broadband availability, $7.5 million from higher education, $96 million from MSDH’s COVID-19 funds for hospitals, $13 million from the Department of Agriculture, $99.3 million from social welfare, $115 million from Military, Police and Veterans Affairs and $55 million from the Employment Security Fund, which helped fund the enormous uptick in unemployment benefits after “non-essential” businesses were shut down last spring.

Read the governor’s proposal (PDF).