JACKSON — State lawmakers are taking a break in their annual three-month session, but they still have hard work ahead in trying to find more revenue and construct a state budget complicated by the economic recession and red tape in spending federal funds to help Mississippi.
The House and Senate recessed Wednesday with plans to return May 4 to take up the budget, but that”s subject to change by their legislative leaders.
Legislators left unresolved a cigarette tax increase, which they hoped to have enacted by now to raise millions of much-needed dollars for the state”s car-tag reduction fund and other budget priorities.
While the Legislature is not meeting, House-Senate negotiators can still hash out a compromise to have for legislators to approve when they return.
“Because this recess will not halt the negotiation process, the Senate conferees will continue to work with the House toward a reasonable solution,” said Republican Lt. Gov. Phil Bryant, who”s in charge of the Senate.
Mississippi”s 18-cent-a-pack cigarette tax is the third-lowest state rate in the nation.
The Democratic-dominated House of Representatives in January voted to set the tax at $1 a pack, and the Republican-controlled Senate approved 49 cents.
In seeking a compromise, House negotiators have gradually bargained down to 90 cents, 80 cents and then 75 cents. Senate leaders have moved up to 55 cents, 60 cents and then 64 cents with the option to raise it again in 2011.
“We”re just too close to let this go by,” said Senate Finance Chairman Dean Kirby, R-Pearl, the chief Senate negotiator on House Bill 364. “We”ve got to find some money for the car tags and we need for people to quit smoking — and this is the solution.”
The 64-cent tax would generate at least $114 million a year in new cigarette tax revenues for the state treasury, according to Senate estimates.
The state”s car-tax reduction fund has run dry and needs more money because of a slump in auto sales and the state revenue they generate. The car tag fund enables local governments to provide car owners a discount set in law on their automobile tags. Unless legislative changes are made, counties won”t get reimbursed or car owners could see their taxes double.
House and Senate leaders have tentatively agreed to put $23 million into the car tag fund from new revenues gained by hiking cigarette taxes, but a consensus has been elusive on how high the new tax should be.
Rep. Jeff Smith, D-Columbus, said it”s going to take more public pressure to get legislative negotiators to agree.
“I”m pessimistic about it at this point, but I do feel when people start buying their next car tags and there is a huge outcry, they will (compromise),” Smith said.
“I think the House has been more hard-headed on this than the Senate,” he said.
House Ways and Means Chairman Percy Watson, D-Hattiesburg, said he wants to ensure a cigarette tax increase raises as much money as possible.
“We still have reason to hold out for additional revenue,” said Watson, the House”s chief tax negotiator.
He noted just a few cents extra on cigarettes means millions of tax dollars for the state treasury. For example, 4 cents equals $13 million a year, according to estimates provided to the Legislature.
The federal cigarette tax just went up Wednesday from 39 cents to $1.01.
The Legislature by last Friday was supposed to pass the state”s $18 billion budget for the next fiscal year, but it delayed enactment until they know more details about how to spend the federal economic stimulus funds Mississippi is getting.
The state is projected to receive more than $2 billion from Washington, but it comes with confusing requirements that lawmakers want to clarify and assess how it impacts the state budget.
Along with the state”s budget left in limbo during the legislative recess are measures to fund Mississippi”s deficit-plagued Medicaid program. The House and Senate are at odds over how much to tax Mississippi hospitals to generate revenue for Medicaid
If the House and Senate don”t agree on a tobacco tax increase and resolve the Medicaid funding deficit, most of state government could get cut by 20 percent and car tag prices will go up, said Senate Appropriations Chairman Alan Nunnelee, R-Tupelo.
“Those aren”t pretty talking points, but they”re reality,” he said.
“It is very, very bad,” said House Education Chairman Cecil Brown, D-Jackson, one of the Legislature”s chief budget writers. “If we don”t do something, we”re going to see huge cuts and layoffs in state government in the next year or so.”
Because of the slumping economy, the Legislature last month slashed $300 million from the current state budget and $400 million from projections for next year”s budget. Lawmakers aren”t sure yet how much of the federal stimulus funds will help offset the state revenue declines.
To read bills, follow their progress and see how legislators voted, go to the Mississippi Legislature”s Web site: billstatus.ls.state.ms.us.
The Dispatch Editorial Board is made up of publisher Peter Imes, columnist Slim Smith, managing editor Zack Plair and senior newsroom staff.
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