Lawmakers adopt FY 2025 revenue estimate

• While both a new FY2024 and FY2025 estimate were recommended by the Revenue Estimating Group, the committee only voted to approve the FY25 number of $7.6 billion.

Lawmakers on the Joint Legislative Budget Committee (JLBC) heard from the Revenue Estimating Group on Friday regarding General Fund estimates for Fiscal Years 2024 and 2025.

State Economist Corey Miller, representing the estimating group, told members of the committee that the group recommends the General Fund estimate for FY 2024 be changed to $7,677,800,000, which is a decrease of 0.2 percent over actual FY 2023 general fund collections.

However, this new recommended number represents an increase of $154 million over the FY 2024 estimate, which was $7,523,800,000.

The latest revenue report released earlier this week, total year-to-date revenue collections for the Magnolia State in the current fiscal year is now nearly $179 million more than lawmakers anticipated. There are three months remaining in the fiscal year, which ends June 30th.

READ MORE: Mississippi revenues exceed estimates by $87 million in March

Furthermore, the estimating group recommended the General Fund estimate for FY 2025 be set at $7,600,100,000. A decrease of 1 percent, or $77,700,000 below the recommendation for the FY 2024 estimate, but an increase of $76.3 million over the initial FY 2025 estimate.

The committee voted to adopt the minutes from the previous meeting and the FY 2025 estimate of $7.6 billion. They did not vote to adopt the new FY 2024 estimate recommendation.

Prior JLBC meetings have left members in disagreement over where the FY 2025 estimate should be set. A proposal to reduce the original estimate to $7.523 billion, the same as the current fiscal year and a reduction of roughly $113 million, was met with disagreement by Governor Tate Reeves who questioned why lawmakers were not basing the estimate off of the recommendation from the Revenue Estimating Group.

RELATED: Joint Legislative Budget Committee, Governor in disagreement of FY2025 budget estimate

At the time, Lt. Governor Delbert Hosemann said it was because there were concerns that the economy would continue to slow. In December, lawmakers moved forward with adopting the $7.523 billion revenue estimate despite the Governor’s disapproval.

The sine die, or end of session, revenue estimate from the 2023 legislative session for FY 2024 represented a 2.2 percent decrease in General Fund collections compared to FY 2023. However, State Economist Miller said through March of this year, collections have been nearly identical to FY 2023.

“As of March, year-over-year collections of sales tax and use tax are up 3.4 percent and 3.6 percent, respectively,” said Miller.

These rates of growth were typical prior to the COVID pandemic and likely reflect the 3.7 percent increase in personal income in Mississippi.

Miller also indicated that individual income tax collections are down 10.1 percent through March, a reduction that was expected after the state passed the largest income tax cut in Mississippi history in 2022.

As for insurance premium taxes, that line item is up nearly 20 percent, compared to a year ago with revenue from investments up 30 percent. These collections are likely impacted by the increase in interest rates over the last year.

Miller said he does expect those numbers to slow as the unwinding of Medicaid enrollment continues and cuts to interest rates could occur later this year.

He also noted that the estimating group recently focused on expected changes to corporate tax revenue, which is currently down 5 percent year over year.

“We expect because of tax law changes, and the general volatility of this revenue source, that corporate tax revenues will be somewhat less in fiscal 24 and 25 than the level reached in 23,” said Miller.

#####

Editor’s Note: A previous version of this article incorrectly reported that the committee had adopted the increased FY2024 number presented by State Economist Corey Miller.