Continued discussion over a possible gasoline tax increase is seemingly ignoring the passage of a $300 million infrastructure package in the special session last summer.
The Mississippi-raised CEO of the United Parcel Service, David Abney, said at the Delta Council’s annual meeting last week that he supports both a state and federal gas tax increase.
Republican gubernatorial candidate Bill Waller Jr. said he is also supportive of a gas tax hike, coupled with a possible tax swap that could include a reduction in the state’s income tax. House Speaker Philip Gunn (R-Clinton) proposed a similar plan last year.
The Mississippi Infrastructure Modernization Act of 2018 will send 35 percent of the state’s use tax revenues by next year to cities and counties to help with infrastructure. The bill will additionally authorize $300 million in borrowing, with $250 million for the Mississippi Department of Transportation and $50 million for local infrastructure not administered by MDOT.
The other part of the package was the creation of a lottery, the first $80 million in tax revenue annually going to the state highway fund until 2028 and the rest put into the Education Enhancement Fund. Just the highway fund portion alone could add up to $720 million. In 2018, the Arkansas lottery generated $91.8 million in revenue for college scholarships.
After 2028, the first $80 million of lottery tax revenue will go to the general fund, with any additional funds going to the EEF.
The infrastructure bill has increased registration fees for owners of hybrid and electric vehicles and is redirecting gaming tax revenue from sports wagering to roads and bridges. Hybrid owners will pay an additional $75 when they register their vehicles annually, while owners of electrics will pay $150.
Right now, Mississippi drivers pay 37.19 cents in state and federal taxes on every gallon of gasoline, about 11 cents a gallon less than the national average. The state’s gas tax was last increased in 1987.
The federal gas tax has been 18.4 cents per gallon since 1993. For every one cent increase, the state’s gasoline tax revenue ($423,642,449 in fiscal 2018) would increase by about $23 million.
The need for more spending beyond the infrastructure bill borne by taxpayers is questionable. In last year’s annual Reason Foundation Highway Report, Mississippi was rated 11th best overall. The condition of the state’s rural interstate pavement was ranked 37th but the state only ranked 19th in deficient bridges.
Taxpayers will spend $1,105,236,550 on the Mississippi Department of Transportation, with $559 million coming from federal funds and the rest from the state’s petroleum tax.
The Office of State Aid Roads will have an appropriation of $225,410,848 from special and federal funds, which will help maintain 25,857.04 miles of county roads that are considered “feeder” routes between the state highways. This money also goes to maintaining 5,368 bridges on these routes.
One big component in increased infrastructure spending under the infrastructure package is the use tax, which the state can collect from online vendors. This was a result of the 2017 U.S. Supreme Court decision in South Dakota v. Wayfair Inc. that ended the requirement that a state couldn’t collect sales taxes on businesses without a physical presence in a state. The first year after the decision, state use tax revenues increased by 8.37 percent.
In fiscal year 2018, which ended June 30, the state collected $338,166,512 in use tax, which is a 7 percent tax assessed on all out of state purchases. Thirty-five percent of that total would add up to $118,358,279.
So far in this fiscal year, the state has collected $287,901,358 with one more month left in the fiscal year. That’s more than 19.04 percent more than the same time last year. Thirty-five percent of that is $100,765,475.
Highways weren’t the only focus of the infrastructure plan.
It will appropriate $3 million to be divided equally among each municipality. Of the remainder, half would be allocated on a basis of the municipality’s percentage of the state population and the other half would be divided up using a proportion based on the amount of sales tax revenue distributed to a municipality during the preceding fiscal year.
The counties would receive money as well under the plan. One third of the county monies would be evenly shared with each of the state’s 82 counties.
The next third would be allocated to counties based on each county’s proportion of the state’s rural road miles.
The last third would be allocated to counties based on that county’s percentage of the state’s rural residents.