Earlier this week, Governor Bryant released his budget recommendation for the next budget yearThe twelve months of the Fiscal YearThe yearly accounting period for which budget decisions are made. The fiscal year for the state of Mississippi extends from July 1 of one year to June 30 of the next. A fiscal year is referred to by the calendar of the year in which it ends. For example, FY 2011 began on July 1, 2010 and ended on June 30, 2011. plus the lapseThe unexpected portion of any General Fund appropriation which is returned (or lapsed) back to the General Fund at the close of the fiscal year. period.. His plan includes recommended funding levels for schools, law enforcement, healthcare and other state services. Also included, was a plan supporting working families through the Mississippi Working Families Tax Credit.
The tax credit, modeled after the federal Earned Income Tax CreditThe Earned Income Tax Credit (EITC) is a federal tax credit for low- and moderate-income working people. It is designed to encourage and reward work as well as offset federal payroll and income taxes. The EITC is "refundable," which means that if it exceeds a low-wage worker's income tax liability, the IRS will refund the balance. Twenty-five states, including the District of Columbia, have established their own EITCs to supplement the federal credit. (EITC) would reduce or eliminate low and moderate income working families’ income tax liability .
Bryant’s plan would be a great start toward supporting Mississippi’s working families who are struggling to make ends meet. It would be a boost to family economic security as well as local economies. The tax credit could support families even more if it were improved in a couple of key ways:
1) Currently in Mississippi, a family of four with two parents and two children generally does not owe state income taxes if they earn under $19,600 annually and claim standard exemptionsExemptions reduce the amount of taxes owed. Income taxes usually allow exemptions for each taxpayer, and property taxes often allow part of a home’s value to be exempted from tax. and deductions. Under Bryant’s plan these families would not get the full amount of the tax credit because their income tax liability is less than their credit amount. Although the families may not owe state income taxes in a given year, they are taxpayers. These families pay sales taxesSales taxes are charged on the purchase of goods. Mississippi taxes most goods at a rate of 7%. Our sales tax on goods includes all retail purchases of tangible personal property including, but not limited to groceries, clothes, toiletries and over-the-counter medications. The state also charges a 5% sales tax on automobiles., fuel taxes, and others. As a result, most of the states (22 of 26 states) with a with a similar credit refund their state EITC to offset the other taxes for lower income families pay in addition to the income taxes.
2) Bryant’s proposed credit would only be available in years with 3% revenueThe state’s income from any source. Mississippi revenue includes: tax collections, fees, and intergovernmental grants. growth over the previous year and when the state’s rainy day fund is full. This sounds fiscally responsible, but would mean that state taxes on low and moderate income Mississippians would go up in lean times, like a recession; when they can least afford it.
The Governor’s budget recommendation as well as the Joint Legislative Budget CommitteeThe Joint Legislative Budget Committee (JLBC) is composed of 14 legislators, half from the Senate and half from the House of Representatives. The Committee is chaired by either the Lieutenant Governor or by the Speaker of the House of Representatives and the chairmanship alternates between them on an annual basis. In the Senate, the Chairman of the Senate Finance Committee, the President Pro Tempore and the Chairman of the Senate Appropriations Committee are standing members of the JLBC. The Lieutenant Governor names three additional members of the Senate to the Committee. In the House, the Chairman of the Ways and Means Committee and the Chairman of the Appropriations Committee are standing members. The Speaker of the House appoints four additional members of the House to the Committee. The staff of the JLBC is called the Legislative Budget Office (LBO). (to be released in December) will be debated by the legislature when crafting a state budget for the FY 2016 year. Stay tuned for more details on the Governor’s budget, including recommended funding levels for schools, higher education, healthcare and other key services.
Senior Policy Analyst