Legislative leaders say they are still studying the American Rescue Plan, which provides $1.78 billion to the state, to see how it could impact the ongoing 2021 session.

The $1.9 trillion federal package signed into law by President Joe Biden last week could impact the Mississippi Legislature and state government in at least two ways:

• The new law prohibits states from using the federal funds they receive from the American Rescue Plan to offset lost revenue from tax cuts. House Speaker Philip Gunn has proposed a massive restructuring of the state’s tax law that he says is — at least in the first years — revenue neutral. But the conservative-leaning Tax Foundation says the language in the new federal law is broad and could have far-reaching impact for states considering tax legislation.

• The $1.78 billion the state is receiving could be incorporated into the budget that legislators are working on now for the fiscal year beginning July 1. But if legislators choose to use the funds in the upcoming budget year, they most likely will have to stay in session past the scheduled April 4 adjournment date to gather more details about the American Rescue Plan.

“We are going to have some discussions on that,” Gunn recently said when asked about the impact of the American Rescue Plan. Gunn said he is still trying to learn the particulars of the far-reaching federal legislation.

“I don’t know the answer to that,” said Lt. Gov. Delbert Hosemann, who presides over the Senate, when asked if the legislative session might need to be extended because of the American Rescue Plan. “I started reading the bill.” After that, Hosemann said he needs to meet with Gov. Tate Reeves and Gunn to “see what makes common sense.”

Last year the speaker and lieutenant governor agreed to extend the session to expend funds from another COVID-19 relief package. At that time, there was a disagreement between the legislative leadership and Reeves over who had authority to appropriate the funds. Eventually, Reeves acquiesced.

Those funds — in the Coronavirus Aid, Relief and Economics Security (CARES) Act — were designated solely to deal with costs from the pandemic and the funds had to be expended essentially by the end of 2020. The latest package provides more flexibility to allow funds to be used in a number of areas, including to plug budget holes caused by revenue shortfalls and even to help with water and sewer issues, such as those recently impacting the city of Jackson. Plus, the states have multiple years to spend the funds.

Hosemann called the amount in the package for state and local governments “a staggering amount of money.”

Besides $1.8 billion for state aid, the package also is sending $1.26 billion to the state for municipalities and counties. Hosemann cited Gulfport as receiving $18 million and Biloxi as getting $13 million. The city of Jackson is slated to receive about $45 million, and Hinds County is set to garner a similar amount.

Last week the governor criticized the size and scope of the federal legislation but offered few details of how he thought the state should use the funds.

The package also has other pots of money that governments can access. In addition, there are direct stimulus payments to individuals, the extension of federal unemployment benefits, tax relief for many parents, help for businesses, money for vaccinations and funds for other programs.

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