Madison wants legislators to support tax diversion



Sun Staff  Writer

Madison city officials are hoping legislators during the 2018 session will support several items on their “want list.”

Among the city’s priorities are supporting an increase in the sales tax diversion, the Mississippi Municipal League’s resolution to collect unpaid fines, and be included in the annual state bond bill.

“Madison’s top priority this year, as last year, is to support the sales tax diversion,” Mayor Mary Hawkins Butler said. “In the 1990s, the sales tax was cut from 20 percent to 18.5 percent… Give us back what was taken away.”

The 20 versus 18.5 percent is taken out of the original seven percent tax collected for every sale.

“All states use a different model,” Butler said in a previous Sun article. “When you go to Wal Mart and spend $100, the state taxes you seven percent on that $100, and they collect it.”

Then the state will divert 18.5 percent of that original seven percent back to the municipality. However, in 1992, the state increased the general sales tax from six to seven percent and lowered the diversion sales tax from 20 percent to 18.5 percent.

If a Madison Kroger shopper spent $100 on groceries before 1992, the shopper would be charged another $6 in sales tax. Twenty percent of that $6, $1.20, would go back to the city. 

Now a Madison Kroger shopper spending $100 on groceries is charged $7 in sales tax. Eighteen and a half percent of that $7, $1.29, is given back to the city.

Although the city is technically getting more money back, the law was changed 24 years ago, and inflation has increased the cost of everything.

“Nine cents over 24 years? The price of what it takes to provide government services, those things have all gone up,” Butler said. “Look at inflation, cost of living. All we’re saying is, ‘Take it back to what it was before the state cut it 24 years ago.’ Essentially, the state cut down what we keep and increased what they keep.”


If money is spent commercially in unincorporated parts of any county, the state keeps all seven percent of every transaction.

“The cities are the economic engine for the state,” she said. “Over 75 percent of sales tax is generated inside of municipalities. In order for us to maintain our infrastructure and to maintain a safe government for people to do business, we have to be on solid ground.”

By increasing the sales tax diversion, Butler said the state would be making an investment, and the Mississippi Municipal League has supported the push for increasing the sales tax diversion as well.

“This year, the MML is embracing that and supporting the diversion to be restored. It’s not just the larger cities, but the small towns, too. The way we make our state stronger is to make cities and towns stronger, because we’re the building blocks of the state of Mississippi.”


The city also wants to be included in the annual state bond bill in hopes of furthering the Madison Avenue widening project.

“If there is a bond bill, we desperately need some help in building Madison Avenue,” Butler said. “We are required to buy the rights of way that connect I-55 to U.S. Highway 51… It’s a major thoroughfare, and we desperately need assistance in that.”

Butler said Madison Avenue is where a lot of commercial opportunities will develop once the improvement project is complete.

“We don’t know the cost (of the rights of way) at this time… But it’s expensive.”

The whole project should cost approximately $7.5 million.

During the 2014 legislative session, the state Legislature appropriated $1 million to assist the city in funding the project. The $7.5 million is part of the $12 million TIF (tax increment finance) approved by the city in 2015.

Madison Avenue will undergo improvements from I-55 to U.S. Highway 51.

 “Part of the overall plan was, when they did the diamond interchange at Ridgeland and Madison, Ridgeland constructed Colony Park Boulevard and Madison is doing Madison Avenue improvements,” former city attorney John Hedglin said in a previous Sun article.

According to the attorney, the Mississippi Department of Transportation (MDOT) will pay for the actual construction, while the city will pay for some engineering services and mainly right-of-way acquisitions.

“The city plans to use the funds to purchase rights of way,” former city public works director Whit Hawkins said. “MDOT will then construct the road.”

Madison Avenue will be widened into a four-lane boulevard with turn bays at intersections and a five-foot sidewalk on both sides. This portion will extend from the intersection at Grandview Boulevard to the railroad tracks.

The road will then expand into five lanes with a 10-foot shared-use path from the railroad to U.S. Highway 51.

“Those are our main two issues that we’re particularly interested in,” Butler said. “I would say we had a successful year last year. The legislature was good to Madison and many other cities.”



St. Andrew’s Episcopal School seniors on the 2018-19 boys cross country team are (from left) Bain McHale, Clay Morris, Luis Flores, Tucker Shelson, James Xu, and Grant Morgan.