A recent report from the National Association of State Budget Officers speaks clearly to the fact that Mississippi’s economy is improving and along with it, the state’s resources in terms of tax collections.
NASBO’s “The Fiscal Survey of States” is far from a little light reading before bed. It’s a complex, dispassionate analysis of where the states are and where the states are headed in terms of fiscal stability. It’s full of economic charts.
But like all such documents, there’s an executive summary that cuts to the meat of the coconut and speak to the national outlook: “State fiscal conditions are modestly improving in fiscal 2014 with spending and revenues projected to rise above fiscal 2013 levels. Signs of fiscal distress continue to subside, and most states expect revenue and spending growth in fiscal 2014.
“Tax collections outperformed projections in fiscal 2013, and revenues experienced steady gains in most states. Although revenues are expected to increase in fiscal 2014, states are not projecting a rise in tax collections comparable to the gains in fiscal 2013. Revenues increased by 5.7 percent in fiscal 2013, while states project revenues to rise by only 0.8 percent in fiscal 2014.
“This potential softening in revenue collections may pose budgetary pressures for states in areas directly impacted by sluggish growth in the economy such as health care, higher education, and aid to local governments. Fiscal challenges from the modest economic recovery are likely to linger, but these setbacks are not expected to cause significant budget volatility for states in fiscal 2014. Overall, state fiscal trends indicate continued modest growth and stability.”
What about fiscal conditions and economic “stability” in Mississippi? A comparison of actual and current projected tax collections in Fiscal 2012, Fiscal 2013, and Fiscal 2014 show evidence of both growth and recovery.
Few statistics can take a more accurate economic temperature of Mississippi’s main street than sales tax collections. In 2012, Mississippi collected $1.855 billion in sales taxes and $1.911 billion in FY 2013. Collections are projected at $1.946 billion in FY 2014.
What about the earning power of Mississippians? In 2012, Mississippi collected $1.489 billion in personal income tax and $1.650 billion in FY 2013 with $1.668 billion projected in FY 2014.
Corporate income tax collections showed almost 13 percent growth in FY 2012 at $505 million and jumped to $524 million in FY 2013, but are projected to drop 11.4 percent to $465 million in FY 2014.
What does it all mean? It means that Mississippi has in fact eased out of the recession and that there is visible economic growth. Consumer confidence is recovering and people are spending money on durable goods again. But growth rates in collections of sales taxes, personal income taxes and corporate income taxes are projected to cool significantly.
For legislators back on the job in Jackson, the numbers signal caution. Last year saw a break from the forced austerity in state government after the 2008 global economic crash and even more growth in state revenue collections above projections has competition for increased budgets high.
Lawmakers will have some extra money available to them during the current legislative session. But the revenue collections increase won’t come close to meeting the new revenue requests.
The state’s two primary budget items – public education and public health care – will remain major contenders for additional funding. But the state’s corrections system is clearly going to have be part of the discussion as the budget pie is divided and with a gas tax hike doomed, financing highway construction and maintenance remains an open-ended discussion.
At the end of the 2014 session, Mississippi lawmakers - like their counterparts in the rest of the country – will try to maintain the momentum of the last two years in terms of “modest growth and stability.”
The rub comes as a lot of different groups with different priorities walk the halls of the Legislature with differing definitions of just what constitutes “stability.”