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Eliminating income tax top priority for...

Eliminating income tax top priority for Governor Reeves in FY 25 budget recommendations

By: Frank Corder - February 1, 2024

Mississippi Republican Gov. Tate Reeves answers a reporter's question on his announcement of a tech company expected to invest $10 billion to build two data processing centers that will create 1,000 jobs in central Mississippi, during a Wednesday, Jan. 24, 2024, news conference in Jackson, Miss. (AP Photo/Rogelio V. Solis)

Governor Reeves is also asking lawmakers to expand ESAs, pass a Parents’ and Women’s Bill of Rights, and fund site development efforts across Mississippi, among other budget priorities.

Mississippi Governor Tate Reeves released his required Fiscal Year 2025 Executive Budget Recommendation on Tuesday using the revenue estimate as it was originally proposed by the Revenue Estimating Group, the total of which comes to $7.641 billion, per the Governor’s office.

What’s in the EBR?

According to the Governor’s office, the Budget Recommendation highlights an agenda focused on maintaining Mississippi’s “record-shattering economic momentum,” while further strengthening education and training Mississippians for the jobs of the next 50 years. It also focuses on enhancing efforts to preserve public safety and reduce crime, sustaining a culture of life, and protecting women.

“It is on the heels of unprecedented success in our state that I proudly share several of my priorities for Fiscal Year 2025,” said Governor Reeves in a statement. “My objective this year is to keep our state’s momentum going – for all Mississippi.”
 
Governor Reeves’ top priority is eliminating the income tax. He said each fiscal year beginning in
FY25, Mississippi should take the total amount of revenue above estimates and put half of it towards eliminating the income tax. Reeves proposed the following structure to accomplish the phase out:

  • Immediately reduce the income tax to 3%.
  • Phase out each calendar year as follows:
    • Calendar Year 2026: 3%
    • Calendar Year 2027: 2%
    • Calendar Year 2028: 1%
    • Calendar Year 2029: 0%

“Eliminating the income tax does not require cutting expenditures or raising taxes in other areas,” Reeves states. “Rather, it requires that our government lives within its means and those in power recommit to the economic principles that helped build the greatest country in history.”

The Legislature passed a $525 million tax cut plan in 2022 – the largest in state history – that eliminated the 4% income tax bracket and phased down the 5% bracket to 4% over a three-year period. Governor Reeves sought full elimination then, along with former Speaker of the House Philip Gunn, but lawmakers mainly in the state Senate advised caution. The final agreement resulted in the reduction and not full elimination of the income tax.

The Governor lists as his second priority this session the allocation of $100 million for new site development efforts in every region of the state. Over the last two weeks, Governor Reeves has called two special sessions to have lawmakers approve incentives for corporate investments upwards of $12 billion coming to Mississippi. He said project-ready sites are the lifeblood of economic development, and Mississippi will continue winning new business as long as they are available.

Reeves also wants to continue laying the foundation needed for future economic growth and private sector capital investment by allocating $30 million for modernization of the state’s ports, airports, and railways and $294 million for two high-impact capacity projects for I-55 in DeSoto County and SR 7 in Lafayette County.

In the education arena, Governor Reeves is seeking to expand the state’s Education Scholarship Account program (ESAs) to fully meet the needs of every family seeking to utilize the program.

“The existing waitlist is proof of the demand for this program, and that Mississippians want additional educational opportunities,” Reeves said. “Expanding the ESA program will empower parents, further fuel our Mississippi Miracle in education, and help uplift every child with a tailored education experience.”

To achieve that priority, Reeves wants the Legislature to allocate an additional $1.8 million to fully fund the ESA program, and to return education-decision-making power from government to parents.

Governor Reeves is also calling for a Parents’ Bill of Rights to “reassert clearly that parents represent the sole decision-making authority for their children,” a Patriot Education Fund to “help ensure students receive the fundamentals of the civic education,” and a Women’s Bill of Rights to “unequivocally recognize the distinct biological differences between men and women… even in the face of radical activists who demand otherwise.”

As for public safety, Governor Reeves wants lawmakers to allocate an approximately $10.35 million budget increase for Capitol Police to support the efforts began through last session’s HB 1020 that expanded the jurisdiction of the Capitol Police. He is also seeking $4.36 million to comply with House Bill 1216 and assist counties with hiring additional critical support staff positions.

To review the full EBR from Governor Reeves and see more of what he is proposing for the 2025 Fiscal Year, read here.

Revenue Number in Question

Late last year, the Joint Legislative Budget Committee (JLBC) met and attempted to reduce the overall budget revenue estimate number to $7.523 billion, the same as it is for Fiscal Year 2024, despite the Revenue Estimating Group recommending the higher number. Governor Reeves objected to the move.

READ MORE: Joint Legislative Budget Committee, Governor in disagreement over FY 2025 budget estimate

“Arbitrarily lowering the number for no apparent reason hurts our ability to justify tax cuts,” said Governor Reeves at the time. “I’m a very strong proponent of cutting taxes in this legislative session, regardless of what this number is.”

He argued that the executive branch must agree with the estimate, adding that the only proposed budget that is affected by the number is the Governor’s Executive Budget Recommendation.

The Revenue Estimating Group includes officials from the Department of Revenue, the Department of Finance and Administration, the Legislative Budget Office and the State Economist.

Lawmakers on the JLBC were leery to assume an additional $113 million in revenue due to concerns that the economy would slow.

About the Author(s)
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Frank Corder

Frank Corder is a native of Pascagoula. For nearly two decades, he has reported and offered analysis on government, public policy, business and matters of faith. Frank’s interviews, articles, and columns have been shared throughout Mississippi as well as in national publications such as the Daily Caller. He is a frequent guest on radio and television, providing insight and commentary on the inner workings of the Magnolia State. Frank has served his community in both elected and appointed public office, hosted his own local radio and television programs, and managed private businesses all while being an engaged husband and father. Email Frank: frank@magnoliatribune.com
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