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Mississippi mayors divided on how Legislature can help their revenues

Several Mississippi mayors agree that more revenue from the sales tax or use tax needs to be disbursed to their cities by the state.

The differences lie in how that would be accomplished.

Mississippi levies two taxes on sales: A conventional sales tax that customers pay on goods or services they buy in a store and a consumer use tax, which is assessed on all purchases from out-of-state firms.

Before the recent decision in South Dakota v. Wayfair, states were unable to levy sales tax on internet sales because of a 1992 decision that mandated that a company had to have a physical presence in a state (such as a warehouse, store or office) before a state could tax its sales. With another Supreme Court decision authorizing sports gaming nationwide and an additional $100 million in use tax revenue, legislators have plenty of options.

George Flaggs

Vicksburg Mayor George Flaggs is in his second term, but is also known for his three decades in the Mississippi Legislature representing Warren County. He served on the House appropriations, banking and financial services, constitution, budget, public health and rules committees.

Flaggs says that the best way for the Legislature to help cities is to increase the sales tax disbursement that they receive from the state. Municipalities receive 18.5 percent of the revenue from the sales tax and there were several proposals that would've increased that to 20 percent. None passed.

Sales tax revenues have increased 11.5 percent since 2005, according to data from the Mississippi Department of Revenue.

"If they want to take the internet sales tax and that would give them enough revenue to take the (sales tax) diversion (to cities) from 18.5 to 20 or even 21 percent, that's their prerogative and I encourage that," Flaggs said. "The cities need some relief. I think the internet tax should go to the general fund, which will ultimately create a high general fund.

"From there, you change the law that says cities get reimbursed 18.5 percent of the sales tax, you instead increase it to, say, 21 percent."

He says that disbursing use tax revenues would put cities in needless competition with each other and that the DOR would only have to change numbers in its existing formula to divert sales tax revenue to the cities.

"The fairest way to do it is a higher percentage (on the disbursement)," Flaggs said. "If you put the money in the general fund, increase the disbursement, that's the fairest way to do it. I like to keep it simple and effective."

Jake Windom

Pearl Mayor Jake Windom is in his first term and strongly supported a bill proposed by state Rep. Mark Baker (R-Brandon) that would've provided 15 percent of use tax revenue to cities for infrastructure needs.

"We don't get to operate in theory, you have to operate in application and this diversion, our percentage, should be coming back to the cities for infrastructure," Windom said. "House Bill 722 (Baker's bill) would've allocated about $800,000 to us and we desperately need this money. Instead of going to the general fund, it needs to be distributed to the cities."

DOR told Windom in a meeting after his election that the state was losing between $150 million and $300 million in potential sales tax revenue to online retailers.

"We need to capture some of that revenue," Windom said. "Our Rankin County delegation was out front in trying to get House Bill 722 into effect and getting some of this diversion to our cities. There should be a formula for taxes that are paid in. We need to be able to recoup our funds and see a larger stream of revenue."

Windom also said that the infrastructure issues faced by cities is a nationwide phenomena, which he said was "people not paying enough to the things that are unseen" and an obsession with things that are "shiny and new." He also said there is never enough money for infrastructure projects, because of their expense

Toby Barker

Hattiesburg Mayor Toby Barker, like Flaggs, is a former legislator who represented Forrest and Lamar counties in the House. He said that he understands the number of directions that legislators can be pulled, especially on conference weekend before the session's end, and that coming up with a solution won't be easy.

"The most recent Supreme Court decisions on internet sales tax and sports betting have created real opportunities for dedicated revenue streams, and I’m sure legislators are considering all of their options," Barker said. "I think municipal infrastructure, particularly in larger cities like Hattiesburg, must be addressed."

He said he supports some kind of local road and bridge plan with an annual revenue stream by the Legislature, but doesn't think that the state should foot the complete bill for infrastructure needs in his community.

"Do I think the state has a role in keeping cities competitive with some assistance for roads, bridges, water and sewer? Of course." Barker said. "However, I don’t think it falls solely on the state of Mississippi’s job to pay for all of my town’s infrastructure investment."

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