Mississippi lawmakers seem ready to put their money where their potholes are.
Two bills, one of which has passed the state Senate already, could mean over $1 billion in infrastructure investment over the next five years.
House bill 722, which could divert millions in use tax dollars to municipalities, passed the Senate on February 7.
As of February 16, the measure had been passed to the Senate Finance committee and is scheduled to go into effect on July 1.
This proposed legislation will dedicate a new annual income stream to cities and counties for road and bridge maintenance plus an additional portion for use by the Mississippi Developmental Authority to provide grants to local government.
With the enactment of this bill, also known as the “Improve Mississippi Act of 2018,” the Department of Revenue will now allocate and distribute 15 percent of the total amount of use tax revenue collected during the preceding fiscal year to municipalities in the state.
The funds will be distributed in proportion with their current sales tax diversion.
To seemingly further assist in the state’s attempt to tackle its infrastructure needs, Lt. Governor Tate Reeves, on Monday, introduced the BRIDGE Act.
BRIDGE is an acronym for 'Building Roads, Improving Development, Growing the Economy, which is what Reeves said the Act will do in addition to providing for a more prosperous future for the state.
Reeves said the proposal could provide over $1 billion in “new money’ to invest in Mississippi infrastructure over the next five years.
According to Reeves, the BRIDGE Act will not create any new taxes for the citizens of the state, because funds will be generated through a combination of grants, long-term debt and the revenue to cities, counties and state agencies for infrastructure projects.Currently Mississippi municipalities do not receive a portion of “use tax” collected by the state, but House bill 722 will remedy that drawback, Indianola Mayor Steve Rosenthal said.
“This past year, collections of voluntary use tax collections exceeded $46 million,” he said. “Bill 722 is to put something in place to make cities whole from the loss of sales tax revenue to internet sales.”
The revenue department will have to make the distributions on or before Jan. 31, 2019, and each succeeding Jan. 31 afterwards.
The funds dispersed to a municipality are to be used solely for paying costs associated with repair, maintenance and or reconstruction of roads, streets and bridges in those cities.
“This large increase in use tax is due to lost sales our brick and mortar stores most likely would have made,” Rosenthal said.
Rosenthal said that the issue is not about collecting use tax or sales tax but how it is appropriated.
“One thing else that is strange is that if you order something online to be picked up at the store, like Walmart or Lowes, the collected 7 percent sales tax is considered use tax since it was ordered via the Internet. So, we are also losing revenue in that way as well,” he said.
“We are asking for the same percentage of use tax that is currently received by all municipalities, which is 14.621 percent, to be divided among all municipalities,” Rosenthal said.
He said Indianola would have received an estimated $155,000 in additional revenue had this bill been in place for 2017.
“Think how much road repair we could do with this amount annually,” Rosenthal added.
When the bill passed the House back on Jan. 11, Speaker Gunn wrote in a press release that House Bill 722 would create a new diversion of state use-tax collections, directing funds back to the cities and the counties to be used for road and bridge maintenance and that the move was a redirection of existing dollars.
“This is one of the best things we’ve done for local government,” said Gunn. “Our efforts will put money back in the hands of the local people. This increases the diversions back to cities and counties, which is something our mayors and supervisors have been requesting for years.”
The release further said that use-tax is gathered from sales tax collected on any out-of-state purchases, including those made online. And that approximately $310 million was collected last year. It said that an estimated $108 million could be diverted based on current collections.
That’s 35 percent to be used toward road and bridge repair with 15 percent, or approximately $46.5 million, dispersed to the cities, proportioned on their current sales tax diversion, another 15 percent to the counties, dispersed according to their current state aid road formula and the remaining 5 percent to fund an annual grant program administered through MDA where cities and counties can request up to $1.5 million additional funding per road and bridge project.
