Staying at a Rankin or Jackson County hotel or eating at a restaurant there can get quite expensive thanks to local tourism taxes.

The highest combined sales taxes on hotel stays and meals at restaurants were located primarily in Rankin and Jackson counties, according to examination of data from the Mississippi Department of Revenue. 

Of the eight cities statewide with total tax levies of 11 percent of more on hotel stays, five of them — Brandon, Florence, Flowood, Richland and Pearl — are in Rankin County. 

The Gulf Coast is also expensive for visitors when it comes to local taxes. All of the other cities on the 11 percent or more list, Pascagoula, Ocean Springs and Moss Point, are in Jackson County. 

Total sales tax on hotel stays in Harrison County, which includes Biloxi, Gulfport, D’Iberville and Long Beach, add up to 12 percent. 

These taxes are earmarked for the Coast Coliseum and Convention Center and the collections amounted to $4,893,319 in fiscal 2019.

There are 28 cities or counties statewide with a combined sales tax for hotels that adds up to at least 10 percent or more.

In Brandon, local and state taxes total 12 percent on hotels. The city levies a three percent tax on hotels that helped construct the city’s amphitheater. Brandon collected $1,224,801 in fiscal 2019 from its special tax.

Rankin County adds an additional two percent tax on hotels, along with the seven percent state sales tax. The county earned $973,495 from its special tax in 2019.

Like its Rankin County neighbors, Richland has a three percent tax on hotels and a two percent tax on restaurants, in addition to what the county assesses. The city earned $476,566 in 2019 from its special tax.

Pearl has two separate taxes. One is levied in the whole city (three percent on hotels and one percent on restaurants), while the other is additional tax (two percent) assessed in the western Pearl restaurant district, which is the area surrounding Trustmark Park and the Bass Pro Shop. 

Pearl collected $1,909,707 in fiscal 2019 from its special tax.

As far as restaurant taxes go, Como in Panola County has the highest combined rate at 11 percent thanks to the state’s highest tax rate, four percent.  

The city has a population of 1,310. According to DOR statistics, the city has collected $73,355 in fiscal 2019, which ended July 1, after earning $70,195 in 2018.

Twelve cities, including Vicksburg, Batesville, Hattiesburg, Jackson and Starkville, have total tax rates on restaurant sales of 10 percent.

The 73 special local levies on restaurants and hotels — the tourism taxes — began life as local and private bills in the legislature. Ten of them are assessed by counties and the rest by cities.

Local and private bills usually benefit a city or county in a legislator's district and are one of the last chores the legislature wraps up before leaving town at session's end.

All of the new taxes will require a referendum of local voters before they can go into effect and usually have an expiration date of three years from passage. Though not all. 

Revenues from these taxes are supposed to go to tourism promotion, such as for a convention and visitors’ bureau, or parks and recreation.

The same rules that govern the passage of general and appropriation bills apply to the local and privates. A three-fifths majority of both chambers are required to pass a new tax, which are pitched as temporary taxes when pitched in a referendum and are often re-authorized when they expire after three years without input from local voters.

Of the special taxes, 39 of them are listed on the DOR site without repeal dates, meaning local officials would have to act to get them off the books.

The local and private committees in each chamber of the Legislature are the only committees authorized by the Mississippi Constitution, with the rest mandated by legislative rules and state law.

The Office of the State Auditor uncovered a raft of issues with the Hinds County School District during a routine audit, according to a release by the office on Monday.

Some of those issues included $50,000 of improper expenses by the district’s finance officer Earl Burke, $54,000 in adjustments that needed to be made to reconcile the district’s bank statements, some credit card statements that weren’t reviewed by the district and $2 million worth of purchases of iPads and Apple laptops that didn’t use a competitive bidding process.

The release also said that auditors found that some spending records had been destroyed before they were reviewed.

Burke, according to audit, was responsible for $50,000 in unauthorized expenses that included:

• A personal car allowance that added up to $33,000 and was never approved by the district’s board.
• Used district funds to make personal purchases such as an in-air internet subscription, a stay in a luxury hotel suite and other unapproved expenses that totaled nearly $10,000.

The iPad and Apple laptop purchases went against state procurement laws, which require competitive bidding for most large purchases.

“This uncontrolled and unlawful administrative spending is not acceptable,” Auditor Shad White said. “It shortchanges teachers and students. It’s not fair for taxpayers. They all have a right to be angry about this kind of administrative spending.

“It results in money going outside the classroom and it violates our spending laws. I expect the district to take swift action to make sure this stops.”

In 2018, the Hinds County School District received more than $63 million in operating revenue, mainly from property taxes ($26.5 million) and state and federal funds ($26.2 million). The district went over its budget by $4.46 million in 2018. 

The district spent 44.7 percent of its budget on instruction, with 39.7 percent spent on support services and non-instructional expenses.

According to numbers released by the U.S. Department of Agriculture, the Mississippi Department of Human Services has the fourth lowest payment error rate nationally with the Supplemental Nutrition Assistance Program.

The low numbers could be a mirage, overshadowed by the state’s use of a consultant whose practices have gotten other states in trouble with the U.S. Department of Justice, which has settled with three states to repay $17 million in unearned bonuses for low error rates. DHS hired the consultant to improve error rates with the SNAP program and the firm earned $424,629 from taxpayers in contracts from 2011 to 2017.

Mississippi’s payment error rate was 2.43 percent on overpayments and 0.49 percent for a total error rate of 2.92. South Dakota was first with a total error rate of 1.04 percent, Idaho was second (2.13 percent) and Louisiana (2.7 percent) was third. The national error rate average was 6.3 percent and only 23 states equaled or were less than the national average.

The error rate in 2017 was 3.29, up from 2014 when the error rate was 1.16 (the USDA didn’t release complete error rate data for all state and territories in 2015 and 2016). States can receive monetary bonuses for low error rates and penalties for higher ones.

Mississippi received nearly $6 million in bonuses while utilizing advice from Julie Osnes Consulting from 2011 until 2017 and could have to pay the money back. The DHS paid her firm $246,270 for their final contract. Osnes agreed on June 18 to pay the U.S. $751,571 to resolve allegations of violations of the False Claims Act by causing states to submit false quality control data.

The way the errors are calculated is a multi-step process. State agencies first randomly select a sample of households that participate in the SNAP program, which adds up to about 50,000 nationally. The state agency staff interview participants and conducted a detailed review of the household’s eligibility. The states then calculate the number of errors. 

The USDA does a check of about 25,000 of the reviewed SNAP cases to assure that the state agency followed proper policy. The state agency then corrects the errors and the USDA analyzes the data to arrive at the national and state payment error rates.

According to the USDA, 60 percent of the errors are with a state agency. These errors can include errors in data entry or application processing or failure to do matching for citizenship, work status or other criteria for eligibility. Forty percent of the errors, according to the USDA, derive from recipients failing to report earnings, assets or expenses.

Taxpayers spent more than $728 million in Mississippi for SNAP for fiscal year 2019. 

Mississippi wouldn’t be the first state to run afoul with the DOJ for using Osnes as a consultant. Three states — Alaska, Virginia and Wisconsin — that employed Osnes as a consultant reached settlements with the DOJ in 2018. Virginia and Wisconsin paid $7 million apiece, while Alaska had to pay back $2.5 million. 

An investigation by the Department of Justice found that Osnes — who was paid by the state of Wisconsin to consult on their SNAP program — used "several improper and biased quality control practices" to lower its error rate and qualify for bonuses to which it hadn't earned. 

According to an archive of Osnes' now-shuttered website, Mississippi received $1.18 million in bonuses for fiscal 2013 for having the lowest payment error rate and $2.7 million in fiscal 2012 for lowest case and procedural error rates. 

Mississippi's first contract with Osnes was a two-year pact that began on October 1, 2011. She received $62,307 for her services in fiscal 2012. In fiscal 2013, her contract netted her consultancy firm $17,900. 

The state and Osnes reached an agreement on a new contract that started on February 2, 2014 and the firm received $53,152 for its work.

DHS continued the deal despite the U.S. Department of Agriculture's Office of Inspector General releasing a report on September 2015 that decried the use of consultants such as Osnes to help with quality control over household eligibility.

The state and Osnes entered another contract starting April 1, 2015 and ended on February 1, 2016, with Osnes paid $45,000 for her services. The department and Osnes reached terms on an extension that started when the first expired. The last payment of $29,541 was made on June 1, 2017 and no more subsequent payments were made, according to an examination of state records.

Nike doesn’t need state incentives to locate a new logistics facility in north Mississippi, but a medical supply business does to relocate to the same area.

Nike announced that it will add to its workforce of 3,200 at four Memphis-area facilities across the state line in Marshall County, just below the Tennessee city of Collierville and conveniently located on Interstate 269. The new facility is expected to open in spring 2020 and create 250 jobs related to logistics and supply chain.

According to Mississippi Development Authority spokesperson Tammy Craft, Nike will receive no subsidies from state taxpayers.

Medline Industries will bring 450 jobs to Southaven in DeSoto County and will receive $3.8 million from state taxpayers, with a $100,000 grant to relocate equipment and a $3.7 million grant for infrastructure, according to Craft.

The distribution hub will cost the company $46 million and the state said in the news release that some of the jobs will be existing positions filled by employees at its Memphis location, but that a large number will be created for Mississippi residents. That adds up to $8,444 per job.

Medline plans to begin operations in Southaven in early 2021.

"Medline's investment in the Southaven community and the creation of hundreds of new jobs marks the beginning of a long-lasting business partnership with the state of Mississippi and a long-term commitment to the people of DeSoto County," Gov. Phil Bryant said in a news release.

Earlier in February, DeSoto County received another heavily subsidized economic development project. German agricultural implement company Krone will receive a $7.3 million in property and inventory tax breaks, in addition to a $250,000 grant to relocate its equipment.

The company is moving its headquarters and 45 jobs across the state line from Memphis to Olive Branch.

Krone could also receive incentives that rebate some income taxes for its employees to the company, provided the workers are paid at least $37,521 annually. That could add up to $675,000 annually over the next decade.

From 2012 to 2017, taxpayers have spent $678 million in just MDA grants alone from 2012 to 2017, or about $19,765 per job.

Medicaid expansion remains deeply unpopular with Mississippi voters, as recently released polling from Mason-Dixon finds and as Tuesday’s Republican primary results certainly did not dispel. 

This is perhaps surprising, given that many people don’t know much about Medicaid. This lack of knowledge has allowed politicians and others to try to sell Medicaid expansion as a cure all for many of Mississippi’s problems. To set the record straight, Medicaid is not a very good parachute for rural hospitals. It’s also not a very good way to boost the state’s economy. Medicaid is not even going to improve health care outcomes for the working poor. Medicaid expansion is going to be far more expensive than anyone predicts. It is also going to squeeze out funding for other priorities, like K-12 education and roads.

In order to understand what Medicaid is, we need to understand who benefits from it. One would think Medicaid most benefits the patients enrolled in it. The academic research indicates otherwise. To understand why, we have to acknowledge that merely holding a Medicaid insurance card does not guarantee health care. Medicaid is not health care; it is a government-subsidized health insurance plan. Compared to private insurance, however, Medicaid insurance is not very good. To begin with, it’s expensive: not for the people on Medicaid, but for the taxpayers who subsidize it. Second, many doctors don’t accept Medicaid because it pays less than private insurance and, sometimes, less than self-paying patients. 

The Affordable Care Act (Obamacare) made a very expensive bet that one group, in particular, would benefit from expanding Medicaid. As it turns out, this bet was wrong. It’s instructive to realize who the ACA did not expand Medicaid coverage to. Not low-income children, who are already covered under a program called CHIP. Not disabled people, many of whom are languishing on home and community based Medicaid waiting lists. Not the elderly, who are already eligible for Medicare. Rather, the ACA expanded Medicaid to able-bodied, working-age adults earning up to 138 percent of the federal poverty level.

Every one of these people already have access to health care, thanks to a federal law called EMTALA, which requires hospitals to treat anyone who enters an emergency room, regardless of ability to pay. Substituting Medicaid coverage for EMTALA coverage will not change the quality of care for most of these patients. Thus, researchers have found that Medicaid expansion “increased the use of health-care services,” but “had no statistically significant effect on physical health outcomes.” In turn, the same team of Ivy League researchers concluded that the primary beneficiaries of Medicaid expansion are hospitals. 

Basically, Medicaid expansion is a backdoor mechanism Mississippi hospitals hope to tap into to pay for the unfunded mandate that is EMTALA. The trick for the hospitals is that Medicaid does not pay very well. Thus, their goal is to steer Medicaid patients toward lower-cost services that will provide a larger profit margin. For some hospitals, this will work. For others, it won’t. The hospitals are willing to roll the dice on Medicaid expansion, but Mississippi voters are not.   

Recent polling by Mason-Dixon found that 55 percent of Mississippi Republican primary voters are less likely to support a candidate who votes for Medicaid expansion. This number soars to 70 percent when voters realize that Medicaid expansion will compete for funding with other priorities, like K-12 education, roads and bridges, and the state retirement system. I believe these voters intuit that Medicaid expansion is a bad bet – not because they don’t care about low-income adults or rural hospitals or poor children (who, again, are already covered by SCHIP!).

Mississippi voters care about all these issues, they just think there are more targeted ways to help each of these groups. Consider that the best way to help the working poor is to encourage them to obtain a good job. Yet, nationwide, more than half of Obamacare Medicaid recipients are not working.

Is it any surprise, then, that Medicaid expansion has been far more expensive than expected in the states that have tried it? According to analysis by Jonathan Ingram and Nicholas Horton, “States have consistently and grossly missed their expansion enrollment projections, already signing up more than twice as many able-bodied adults than they anticipated would sign up at any point in the future.” As a result, Medicaid is squeezing out other state budget priorities, consuming “one out of every three dollars in state budgets.” This includes Indiana, whose 2.0 “reform” cost more in year one than a traditional expansion would have cost and is forcing lawmakers to find new sources of revenue via tax and fee increases. It also includes Arkansas, whose Medicaid expansion cost almost twice as much as predicted, far more than traditional expansion, and whose attempts to rein in costs with a work requirement have been nullified in court.

If state lawmakers want to help rural hospitals, they should craft a credible plan to do so. Likewise, there are many ideas – ranging from deregulating charity care to encouraging nonprofit hospitals to do their fair share – that could increase health care access for low-income, able-bodied adults. Throwing Medicaid money at these problems would be a lazy, foolish, and expensive gamble. Mississippi voters know better.

This column appeared in the Clarion Ledger on August 11, 2019. 

New polling shows that Republican voters in Mississippi oppose expanding Medicaid and are less likely to vote for candidates for office who support expansion.

The poll, conducted by Mason-Dixon Polling & Strategy, found that 55 percent of Republican voters would be less likely to vote for a candidate who supports Medicaid expansion. Just 26 percent would be more likely. 

“Republican voters are not buying the lie that Mississippi needs to expand Medicaid to able-bodied adults,” said Jameson Taylor, Vice President for Policy at Mississippi Center for Public Policy. “Even the lipstick-on-a-pig Medicaid expansions in Indiana and Arkansas are costing far more than expected, leading to tax and fee increases. Medicaid is a budget buster that will radically reduce available funding for K-12 education and roads and bridges.”

When voters were then told that Medicaid expansion has generally cost millions more than expected, which has resulted in tax or fee increases, along with increased competition for general fund priorities like education or infrastructure, opposition to expansion increased even further.

Republican voters, by a 70-13 margin, said they would be less likely to support a candidate who favored Medicaid expansion. 

“Medicaid is the worst form of welfare there is,” Taylor added. “Unlike other forms of welfare, like Food Stamps, the courts won’t let states require that able-bodied Medicaid recipients work or volunteer. There are also no time limits. 

“Medicaid expansion is a welfare trap, which is why more than half of expansion enrollees are not working. Medicaid expansion would deny these people of the American dream, the promise that with hard work and grit anyone can be a success in America.”

The full poll results can be found here.

If you went to the Nehsoba County Fair in hopes of hearing candidates for the top offices in the state preach fiscal conservatism or ideas to shrink the size of government, you came away disappointed.

Numerous candidates – both Democrats and Republicans – spent the bulk of their time, as they have spent most of their campaigns, singing from the big government hymnal. And if they get their way next year, we could be looking at a much larger government, a larger budget, and higher taxes for all.  

The most common bi-partisan item was the need to expand Medicaid, though we have also been told there is a “Republican” way of moving more people to government insurance. We like to cite Indiana. After all, Vice President Mike Pence, the Indiana governor at the time, worked on a deal with the Obama administration known as HIP 2.0. In reality, the program is little different than every other state that has expanded Medicaid. Costs have gone up, few – if any – people are contributing, and virtually no one has been dis-enrolled. 

We’ve been told that we should do this because it’s “free money” from the feds. Regardless of a personal disdain for using the word “free” when it comes to healthcare or whatever else politicians are giving out, we know this would come at a cost to state taxpayers. There is still no such thing as a free lunch.

Estimates generally put the  additional cost at roughly $200 million per year. But as other states have shown, Medicaid expansion estimates generally balloon, leading to greater costs to the state. 

Maybe that’s why the Mississippi Republican Party passed a resolution in 2013 opposing Medicaid expansion and supporting the GOP’s attempts to resist expansion. Times have changed I suppose.  

And then there are the needs to spend more on roads and bridges. Ignoring the hundreds of millions of dollars the legislature appropriated in a special session last year or the fact that most of the troubled roads and bridges are locally controlled, there seems to be a never-ending desire to raise gas taxes. “Lots of other states are doing it so we should as well,” say the proponents. According to most of candidates at Neshoba, “It’s the only thing we can do”

Again, support for higher taxes was bi-partisan. It appears very few candidates have learned the art of saying “no.”

The truth is Mississippi doesn’t have a problem with failing to spend government funds. Said more accurately, our government officials have not been stingy when it comes to spending taxpayer money on all sorts of programs. On a per capita basis, we have one of the largest governments in the country. We have a larger government workforce than most. Government controls 55 percent of our state’s GDP. How much higher can that go? When you understand these facts, it makes the pleas for more government “investment” ring hollow.

Despite this evidence,  most candidates running for the top offices in the state don’t think government is large enough. 

To the dismay of numerous business groups, the Mississippi legislature opted, once again, not to raise gas taxes in the state this year.

Mississippi continues to have the third lowest gas tax in the country, at 18.4 cents per gallon (cpg), which is identical to the federal gas tax motorists also pay. Only Alaska (14.66 cpg) and Missouri (17.42 cpg) have lower gas taxes.  

On July 1, motorists in 14 states saw their gas taxes raised, either through new taxes approved by the legislature or due to automated increases. Tennessee is in the final stage of a phased in 6 cent per gallon increase, which included a 1 cent per gallon increase this year. 

Illinois drivers saw the biggest jump – as their taxes went up 19 cents per gallon. Those who purchase gas in California, Connecticut, Indiana, Maryland, Michigan, Montana, Nebraska, Ohio, Rhode Island, South Carolina, Vermont, and parts of Virginia also experienced increases in gas taxes. 

Gas taxes among neighboring states

As a result of the low taxes and other factors that help Mississippians pay the least per gallon in the country, many – not just the business community, but both Democrats and Republicans running for governor – have called to raise the state’s gas tax, with the belief that it will be less painful and that the state desperately needs it. Some advocate for adjusting the tax to inflation annually, thereby preventing legislators from ever having to vote for a tax hike again while ensuring regular increases.

Simply because your taxes happen to be lower than other states does not mean you should raise them to match those states. That is bad policy. Besides, all this would do is simply redirect money from the private sector to government. A government that already controls 55 percent of the state’s economy. 

Taxpayers currently spend over $1 billion annually on the work of the Mississippi Department of Transportation. Some might want more, but the biggest problems with Mississippi roads are not state-maintained roads. Of the 479 bridges that are currently closed, only 11 are state controlled – and they are all being replaced. The rest are maintained by cities and counties.  

And far too many of those localities are simply not keeping up with their roads and bridges and that is evidenced by what they spend. For example, Hinds County has spent an average of only 6.48 percent of its annual expenditures in the last three years on roads and bridges. It has 44 bridges closed, according to the Office of State Aid Roads. Neighboring Rankin and Madison counties spent 31 and 22 percent on roads and bridges, respectively. 

Increasing the gas tax would not help local governments as those taxes go to the state and the Department of Transportation. 

As we often see in government, the first reaction is a tax increase. Before we start looking for more sources to fund infrastructure, we should do everything in our power to ensure taxpayer monies are carefully expended and that suppliers and contractors are producing the most value possible for the dollars they receive. And all of it should be open and transparent. 

Our government officials should be negotiating hard with incumbent contract holders on price and inviting competition at every step to ensure maximum bang for the buck. 

And if we don’t have enough competition amongst existing contractors or those suppliers don’t have enough capacity to handle the work without charging more, we should open up the competition by inviting others to enter the bidding. 

These dollars belong to the taxpayers and they should be respected as such.

The biggest question about the new Mississippi Lottery is how much revenue it will generate for state government.

Comparing to lotteries in two states with similar populations, Arkansas and Kansas, show that the Mississippi Lottery Corporation could generate between $75.2 million (three-year average for Arkansas) and $114 million (three-year average for Kansas) for state coffers. 

“I like to tell people if you’re a fan of the lottery, the bad news is we’re the 45th state to enact it,” said Gerard Gibert, who is Vice Chairman of the Mississippi Lottery Corporation board of directors. “The good news, we’ve got 44 other states to draw from as we build out the environment.”

Gibert said he thinks that the lottery will generate about $400 million annually in gross revenue. He also said the board is targeting December 1 as the on-sale date for its first tickets, a date he says is subject to change.

Using the three-year average of percent of transfers to the state treasury from gross revenue ($516,236,822 in 2019)from Arkansas (18.78 percent), $400 million in gross revenues for the Mississippi lottery would add up to about $75.2 million annually. 

Over the last three years, Tennessee’s lottery has sent about 25 percent of its revenue ($1.16 billion in 2018) to the state treasury. If this is the case in Mississippi, that’d be about $100 million in revenue for taxpayers annually.

Kansas has averaged about 28.57 percent of its gross sales ($268,948,805 in 2018) generated as revenue for the state in the past three years and using this model would yield about $114 million annually.

While the law says a minimum of 50 percent of the Mississippi lottery’s revenues will be awarded as prizes, Gibert said that amount might go up to 55 percent. Kansas has averaged 58.18 percent of its revenues going to prizes, while Arkansas has sent about 68 percent of its gross revenues to prize winners. 

Tennessee awarded 63.79 percent ($1.039 billion) of its $1.616 billion in revenues to prize winners.

Gibert said the lottery corporation is primarily a sales organization and that its primary goal to maximize revenue for the state using a carefully crafted lineup of instant and online games.

By law, the lottery is supposed to provide the first $80 million in revenues for the State Highway Fund, with the excess going to the Education Enhancement Fund. Retailers will receive a six percent commission.

Gibert says that Arkansas presents the easiest comparison for Mississippi. In the last three fiscal years, the Arkansas Scholarship Lottery has enjoyed increasing revenues with an average of $91 million being transferred to the state in the form of college scholarships.

In the last three years, 81.5 percent of the lottery’s revenues went to expenses, such as prizes, advertising and commissions for retailers. 

In comparison, the Arkansas lottery awarded 67.7 percent of its gross revenue in the form of prizes in fiscal 2019. Arkansas pays a five percent commission to retailers and has 1,915 retailers selling lottery tickets at present.

Arkansas lottery revenues

Another comparison would be Kansas, which has a similar population and is predominately rural. 

The Kansas lottery was started in 1988 and it has averaged about $78 million per year returned to the state treasury. Net sales for Kansas have averaged between $244 million and $268 million in the last five years.

Kansas pays a five percent commission to retailers.

Kansas lottery revenues

Gibert says one of the goals of the Mississippi state lottery corporation’s board is to have extensive oversight over its finances. The lottery will be subject to audits from both the state auditor’s office and an external CPA firm. The corporation will also hire an internal auditor.

The lottery was authorized by an amendment to the state’s constitution in 1994, but it took until the 2018 special session of the Legislature for the legislation to make it to the governor’s desk for signature. It was part of a multi-million infrastructure improvement package.

The only prohibitions on vending for the lottery is at Mississippi rest areas and for stores exclusively devoted to selling lottery tickets.