State tax revenue turns around
Two months does not make a fiscal year. But Mississippi Republican leaders, who crafted an extremely tight budget this year, have to be thrilled that state tax revenues for July and August are $53.7 million higher than a year ago.
This is an eight percent increase — from $665 million last year to $719 million this year. It’s a very good sign of strength for the first two months of the state’s fiscal year.
Sales tax receipts, with a very strong August report, are up by $5 million. Also, individual income tax payments are up by $23 million for the two months.
The use tax, which basically is an assessment on some products used by businesses, is up by $6 million. The “insurance premium tax” is up by $14 million.
A recent report from the Legislative Budget Office said the only area where receipts are lower this year is the corporate income tax. That’s by design, as the Legislature passed bills reducing the tax burden on businesses.
It will take a few more months to answer the question of whether this upswing in business activity is due to a pent-up eagerness to spend by both individuals and businesses, or because of legislative tax reductions that are starting to take effect. Or it could be both factors, which seems to be the most logical assumption.
If tax revenues continue to meet or exceed expectations, it will be a pleasant reversal of the downward trend over the last two years. Continually lagging revenues forced Gov. Phil Bryant to make several budget cuts and dip into the rainy-day fund for extra cash.