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The Senate killed Republican House Speaker Philip Gunn’s proposal to eliminate the state income tax and increase sales taxes without a vote on Tuesday, letting the measure die in committee under a deadline.

House GOP leaders, angered by the Senate move, late Tuesday inserted the tax overhaul language as an amendment into a “bond bill” that would borrow money for projects statewide.

“The Senate has punted the ball,” House Ways and Means Chairman Trey Lamar, R-Senatobia, told House members on Tuesday. “… They killed this bill. What has the Senate done? They stayed up until 1 a.m. talking about marijuana. They’ve spent endless hours trying to eliminate business incentives that have worked for years.”

“It’s time for bold action, time to continue to fight,” Lamar, a co-author of the tax swap plan, said before the House voted 89-22 to revive the tax measure.

But the tax plan’s eventual passage remains very doubtful as the Mississippi legislative session enters what is scheduled to be its final weeks. The House’s altering of the bond bill to include the tax overhaul could also make it subject to procedure and rules challenges in the Senate.

Senate Finance Chairman Josh Harkins, R-Flowood, declined to take the bill up in his committee on Tuesday, the deadline for it to pass the full Senate. He said the Senate will instead call for a study committee to examine the issue over the summer and make recommendations to the Legislature next year.

House Bill 1439 would phase out the state’s personal income tax, through exemptions, over 10 years. It would cut the sales tax on groceries from 7% to 3.5% within five years. To balance these losses, it would increase the state’s 7% sales tax to 9.5% and increase taxes on many other things, such as farm and manufacturing equipment, by 2.5 percentage points.

Senate leaders, including Lt. Gov. Delbert Hosemann, have questioned whether the bill — introduced by the House relatively late in the session with little heads up to the Senate — has been thoroughly vetted for “unintended consequences” to the economy and state revenue.

“What I want to see is a thorough examination — by people smarter than me — of what impact this will have on our economy, what it will mean for instance, for productivity,” Harkins said. “The decisions we make will have an impact in a lot of areas, and we don’t want to be back here in four or five years trying to redo our taxes because we got something wrong.”

For instance, Harkins said, most owners of limited liability corporations pay personal income taxes instead of corporate taxes. If the personal income tax is eliminated, many businesses would likely switch to LLC formation, which would skew the House’s projections of balancing loss of income tax revenue with other tax increases.

Harkins said that an initial analysis of the House plan that Hosemann requested from the state economist showed that in its first year, initial phaseout of income taxes would cost about $269 million in revenue, but increases in sales, “sin” and other taxes would bring in an additional $1 billion — a huge “net plus” for a measure that is supposed to be “revenue neutral.” He said the analysis showed it would be seven or eight years before the cuts and increases in taxes balance out.

“Apparently the economist is revising numbers he’s given us — might have left out some things that are in the bill — but that’s all the more reason to wait and examine this more closely,” Harkins said.

Rep. Omeria Scott, D-Laurel, also questioned whether the cuts in income taxes, which will be phased in only if revenue “growth triggers” are met, will really balance out with increases in other taxes or net most taxpayers any savings.

“It sounds more like a Ponzi scheme to me,” Scott said.

As the Senate was coming into session Tuesday morning, Speaker Gunn was leaving the lieutenant governor’s office, after apparently making an 11th-hour pitch for the measure.

“We feel very strongly in the House that elimination of the income tax is a good thing for Mississippi,” Gunn said. “I personally do not think there is a bigger policy issue that we’ve ever done or ever will do.

“(The Senate) has some questions,” Gunn said. “We have answers for every one of those. My wish is that they would move this bill along, keep it alive and let us answer questions and work on it.”

Hosemann in a statement on Tuesday said: “It is always important to consider how we as conservatives can leave more money in taxpayers’ pockets. We plan on having a thorough joint conversation about tax reform this summer. A study should focus on truly broadening the base, incentivizing and rewarding hard work, strengthening economic development and training, and right-sizing government.

“We should also realize a system of taxation drives economic decisions for individuals and for businesses, and plan accordingly.”

After Harkins said he would not take up the bill, Gunn told media that House leaders were looking for ways to revive the legislation before the session ends.

“That’s what we intended for (the Senate) to do, keep this alive,” Gunn said. “There were lots of things they could have done to keep it alive … so we could have sat down and worked through any concerns.”

Economic experts and thinks tanks have offered mixed analysis on the impact of the tax overhaul. Some predict it would spur the economy, taking away a “tax on productivity.” Others say it would tank it by increasing taxes on business “inputs” and cause tax pyramiding with its increased sales and other taxes. Still others say it would unfairly place more of the tax burden on the state’s poorest people in shifting to consumption taxes.

Gunn and others point to economic booms in Texas, Florida, Tennessee and other states without income taxes. But Harkins on Monday said, “We’re not Tennessee, Florida or Texas — we’re Mississippi … We need to look at the data and most importantly do something responsibly to put the state in the best place competitively.”

The original measure would have been a tough sell on the Senate floor, facing opposition from many groups. While some conservative policy groups support the measure to phase out the state income tax while raising sales, sin and other taxes, many powerful lobbies — such as those representing farmers, small businesses, manufacturers and teachers — have voiced opposition.

Lamar said his amendment on Tuesday made some changes to address that. He removed the measure’s increases of 2.5 cents on the dollar for farming, logging and manufacturing equipment. As a result the amounts of the first round of income tax cuts would be reduced and the total phase-out of income taxes might take a year or two longer.

Gov. Tate Reeves, who himself advocates eliminating the income tax, said he opposes commensurate increases in other taxes in the House plan. He believes economic growth, and belt tightening by government, would cover any lost tax revenue.

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Mississippi Today is pleased to announce that journalist Sara DiNatale has joined the newsroom as an economy and jobs reporter.

DiNatale, a native of Buffalo, N.Y., will cover economic development and job creation in Mississippi. She will investigate the inner workings of Mississippi’s economic development initiatives and regional economic development organizations, with an eye toward racial justice and equity.

She will serve as the newsroom’s first reporter based on the Mississippi Gulf Coast.

“So many Mississippians are struggling because they either can’t find or aren’t qualified for good, family-sustaining jobs,” said Mississippi Today Editor-in-Chief Adam Ganucheau. “We’ve heard countless politicians say that economic development is key to a better life for those people and a better state. Sara is just the right person to help us determine how those officials are doing. She’s got sharp news judgment and a deep curiosity about how Mississippians are affected by job creation initiatives and economic policy, and she’s ready to sink her teeth into this undercovered but critical beat.”

DiNatale, a graduate of the University at Buffalo, was most recently a retail, tourism and workplace culture reporter at the Tampa Bay Times. Before that, she interned at The Boston Globe, The Oregonian, and The Buffalo News.

“I am excited to join the talented team at Mississippi Today,” DiNatale said. “I look forward to diving right into my new role and uncovering stories that matter to our readers. I’m passionate about local news and watchdog reporting and can’t wait to flex those skills in my new home state. There has probably never been a more vital period to keep a close watch on Mississippi’s economic development than right now in the onset of pandemic recovery. I plan to do just that while keeping the focus of my work on the Mississippians who have been affected most.”

Reach out to Sara DiNatale at sdinatale@mississippitoday.org. Follow her on Twitter @sara_dinatale.

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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.

The post Mississippi lawmakers consider how and when to spend $1.8 billion in federal COVID funds appeared first on Mississippi Today.

Passage of a bill to switch Mississippi’s taxation from income to “consumption” taxes pushed by Speaker Philip Gunn and House GOP leaders appeared unlikely Monday after a Senate panel failed to take it up before a Tuesday deadline.

“When reforming major tax policy, you need to get it right,” said Senate Finance Chairman Josh Harkins, R-Flowood. “… I believe (the House and Senate) want the same thing, and we’ll ultimately get there. It’s just a question of whether it’s this year or next year … We’ve still got another day, and we’re looking at a lot of differing things.”

Under legislative rules, Harkins not passing House Bill 1439 out of Finance on Monday means allowing a Senate vote to take it up Tuesday — its deadline to pass the full Senate — would require a two-thirds vote to suspend rules.

After that, the bill itself would require a three-fifths vote in a Senate where the measure’s reception by Lt. Gov. Delbert Hosemann and other leaders has been lukewarm. And while some conservative policy groups support the measure to phase out the state income tax while raising sales, sin and other taxes, many powerful lobbies — such as those representing farmers, small businesses, manufacturers and teachers — have voiced opposition.

Gov. Tate Reeves, who himself advocates eliminating the income tax, said he opposes commensurate increases in other taxes in the House plan. He believes economic growth, and belt tightening by government, would cover any lost tax revenue.

“At this point, I can’t find any votes for it (in the Senate) the way it’s written,” said Senate President Pro Tem Dean Kirby, R-Pearl.

Hosemann has questioned whether the bill — introduced by the House relatively late in the session with little heads up to the Senate — has been thoroughly vetted for “unintended consequences” to the economy and state revenue.

The House measure would phase out the state income tax, through expanding exemptions, over 10 years while raising the state’s 7-cent sales tax and other use taxes by 2.5 cents on the dollar. It would also cut the state’s sale tax on groceries in half within five years. Economic experts and thinks tanks have offered mixed analysis on the impact of the tax overhaul. Some predict it would spur the economy, taking away a “tax on productivity.” Others say it would tank it by increasing taxes on business “inputs” and cause tax pyramiding with its increased sales and other taxes. Still others say it would unfairly place more of the tax burden on the state’s poorest people in shifting to consumption taxes.

Gunn and others point to economic booms in Texas, Florida, Tennessee and other states without income taxes. But Harkins on Monday said, “We’re not Tennessee, Florida or Texas — we’re Mississippi … We need to look at the data and most importantly do something responsibly to put the state in the best place competitively.”

READ MORE: House leaders move to eliminate Mississippi income tax, raise sales and other taxes in landmark bill

House Speaker Pro Tem Jason White, R-West, a co-author of the measure, said there is still time for the House and Senate to negotiate and repeated the old legislative adage that “noting is dead until it’s dead, dead, dead” and the session is over. He noted this session, set to end by the beginning of April, could go into extra innings because of the federal government’s COVID-19 state spending bill coming in.

White said the chiefs of staff for the speaker and lieutenant governor were meeting late Monday on the issue, and he still holds out hope.

“I think that when an issue gets a unanimous Republican vote, except for one, and nine Democrats including the chairman of their party’s caucus, that makes it a House position,” White said. “It is the number-one priority for us for this four-year term. We would have done it last year except for the pandemic … This process started years ago, it wasn’t something that was just thrown together … It’s a policy whose time has come.”

Sen. Chris McDaniel, R-Ellisville, one of the state’s most conservative lawmakers, said he disagrees with the House plan’s tax increases to cover income tax cuts, but believes that could be remedied and hopes the measure lives.

“(Gunn) is correct, this is a once-in-a-generation opportunity,” McDaniel said, “but the House plan raises 32 other taxes, and we don’t have to do that.”

McDaniel said if the measure does come before the Senate, he wants to offer an amendment to eliminate the states 4% income tax bracket, then phase out the remaining 5% bracket over 10 years, with the phaseout tied to revenue growth.

“We have about 30% more revenue in this state right now than we did 10 years ago,” McDaniel said. “We are about $500 million over our revenue estimate year-to-date and projected to be over by about $800 million by the end of the fiscal year. Eliminating the 4% bracket would cost an estimated $176 million up to the mid-$200 millions. We can do this $176-million tax cut at the perfect time in our state’s budget to do so, while we are flush with cash … Then we can phase out the 5% bracket, and still have roughly $1 billion more in revenue in 10 years than we have right now.”

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All Mississippians will be eligible to receive a COVID-19 vaccine starting on March 16, Gov. Tate Reeves announced on Monday.

Mississippi is the second state to make immunization against COVID-19 available to the maximum number of residents. Last week, President Joseph R. Biden directed all U.S. states and territories to make all adults eligible for the COVID-19 vaccine no later than May 1st.

As vaccines become increasingly available and as new COVID-19 cases in Mississippi have declined in 2021, some say there is room for optimism. Reeves’ move to universally open vaccine eligibility is the latest move in his efforts aimed to return the state to normalcy, which started with the removal of all state-imposed mask mandates and most COVID-related restrictions on business operations.

In Mississippi, 582,217 people — nearly 20% of the state’s population — have received at least their first dose of COVID-19 vaccine. More than 323,000 people have been fully inoculated since the state began distributing vaccines in December. 

The number of COVID-19 cases, deaths, and COVID-related hospital admissions in Mississippi have been trending sharply downward since the January spike. The caseload for the first week of March was more than 83% lower than the January peak, and nearly 75% lower for hospitalizations.

The Mississippi State Department of Health reported 101 new COVID-19 cases and 2 coronavirus-related deaths on Monday. This brings Mississippi to a total of 300,881 coronavirus cases and 6,903 deaths since the pandemic began in March 2020.

READ MORE: Frequently asked questions about COVID vaccines in Mississippi

MAP: Where to get the COVID-19 vaccine in Mississippi

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Rob Hill, executive director of the Human Rights Campaign of Mississippi, talks with Mississippi Today reporters Geoff Pender and Bobby Harrison about how he believes the legislation recently signed into law by Gov. Tate Reeves discriminates and portrays a negative image of Mississippi.

Listen here:

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The number of times Lt. Gov. Delbert Hosemann has recessed the Mississippi Senate in recent days would make elementary-age students green with envyMany of those recesses, it appears, have involved medical marijuana — time needed to strategize on how to pass a medical marijuana proposal out of the Senate, where Hosemann presides.

Arguably no issue has taken more of the Senate’s time this session, counting the recesses, than medical marijuana.

Earlier this month on a key deadline day, with multiple bills pending that would die if not taken up, the Senate spent hours in recess presumably trying to develop a plan to pass a medical marijuana bill. They eventually did, though the Senate stayed in session until after 1 a.m. to finish its work.

On the surface, the issue does not seem that controversial. Hosemann said his only intent is to pass legislation “as a backstop” in case the Mississippi Supreme Court rules later this year that the process used to gather the signatures to place on the ballot an initiative to legalize the use of medical marijuana was unconstitutional. Voters overwhelmingly approved that initiative.

“My Senate could have said the heck with it, but they care about medical marijuana and the people who voted for it..,” Hosemann explained of the Senate’s preoccupation with the issue. “What happens if they (Supreme Court justices) declare it unconstitutional? We don’t come back until next year. What happens to all the people the advocates said would really have to have this… We are trying to make sure the issue they voted on is in effect immediately.”

But some supporters of that initiative fear Hosemann and others are trying to send the signal to the court that it is OK to throw out the initiative because they have “a backstop” so voters will not be too upset if the initiative is found unconstitutional. No doubt, many legislative leaders oppose the medical marijuana initiative because it prevents medical marijuana from being taxed to support education and other aspects of state government, and it severely limited the regulation of the drug.

READ MORE: House kills medical marijuana bill. Senate tries a hail Mary

Warning: The following gets deep in the weeds… of the legislative process.

Last week, the Senate’s effort to pass medical marijuana accelerated after the House killed the bill that Hosemann kept the Senate in session until past midnight to pass earlier this session.

Not to be deterred, the Senate found another bill — a House proposal called “Harper Grace’s Law” dealing with research on cannabidiol, or CBD oil — to insert the language legalizing medical marijuana. The decision to place the medical marijuana amendment in the cannabidiol bill, of course, was done after multiple recesses.

Despite those recesses, the bill would have been voted down if not for Sen. Jeremy England, R-Vancleave, who said he opposed the medical marijuana bill but ultimately opted not to vote, instead “pairing” with a senator who presumably supported the bill but was absent for a family illness. England was on record as being opposed to the bill, but his vote did not count. If his vote had counted, the bill would have been defeated by one vote.

But the Senate leadership made a strategic mistake during recess. The bill had “a reverse repealer,” meaning it would be repealed before it ever went into effect. In this case, the bill stood repealed on Jan. 1, 2021.

Reverse repealers often are added to ensure bills go to conference committee, where further negotiations between Senate and House leaders take place. But in this case a conference committee most likely would guarantee the death of medical marijuana during the 2021 session.

The language added to the Harper Grace’s bill in the Senate probably would not be allowed to stay in the bill had it gone to conference, according to numerous legislative sources. But the complex legislative rules would not prohibit the House from simply concurring in the changes the Senate made and sending the bill to the governor.

But the problem was that the bill as passed the Senate could not be sent to the governor because it would stand repealed even before it reached his desk. So, after more time in recess, Senate leaders mustered the votes to go back into the bill and remove the reverse repealer and pass it again by a narrow margin.

The second time it passed, two senators, England and Sen. Chad McMahan, R-Guntown — both of whom said they opposed the bill legalizing medical marijuana — did not vote, instead pairing with absent senators who supported the bill. Had either England or McMahan actually voted, the bill would have been defeated.

The question now is whether the House will concur with the work the Senate has done to pass a proposal legalizing medical marijuana. If not, Hosemann and senators wasted a lot of time in recess.

READ MORE: Mississippi’s medical marijuana mess

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