JACKSON – The House leadership has revived a plan, though more modest than the original, to divert a 7 percent tax on items sold by online retailers to a program to repair the state’s roads and bridges.
The legislation, passed 109-7 by the House on Thursday, would generate between $50 million and $70 million annually for what various groups are calling badly needed work on roads and bridges, both those maintained by the state and those maintained locally. The plan also would provide $50 million in bonds to pay for repairs to subpar local bridges.
“This is not a perfect plan, but it is more than nothing,” said House Ways and Means Vice Chairman Trey Lamar, R-Senatobia. Lamar and Ways and Means Chairman Jeff Smith, R-Columbus, amended a Senate bill dealing with income dividend tax from other states to include the internet tax collections and bond language.
The legislative leadership has been struggling all session to develop a plan to spend more on transportation needs without increasing a general tax, such as on gasoline. The action by the House Thursday ensures that the issue of more funding for transportation will remain alive for most of the rest of the session, which is scheduled to end in early April.
The bill now goes to the Senate.
“I’m proud of the House for once again stepping up to provide a solution to the needs of our roads and bridges in Mississippi,” said House Speaker Philip Gunn, R-Clinton. “The House has demonstrated it is serious about beginning to address the need this year.”
The proposal would not try to force the internet retailers to collect the tax for the state. But through efforts of the Mississippi Department or Revenue, Lamar said about 30 online retailers are voluntarily collecting the tax for the state. Under current law, those funds go to the general fund.
The legislation passed by the House would divert 50 percent of those funds each year to the Mississippi Department of Transportation and 25 percent each to the cities and counties. Before the Department of Transportation receives the funds, though, it would have to find $25 million in savings in the agency that also would be diverted to what has been identified by numerous groups, including the Mississippi Economic Council, as a crumbling transportation system.
“MDOT needs to have skin in the game, too,” Lamar said.
Earlier this session the House passed legislation to try to force the remote retailers, those that sell items online and through catalogs, to collect the tax for the state. The House leadership estimated that effort would produce between $75 million and $150 million annually for transportation needs.
But Lt. Gov Tate Reeves and his Senate leadership killed the measure. Reeves said it was unconstitutional and produced “fake money” because the U.S. Supreme Court has ruled that the state could not force a remote retailer that does not have a “brick and mortar” presence in the state to collect the tax.
Various states are passing legislation to try to force the judiciary to revisit the issue.
The House proposal passed Thursday would capture any additional money up to $200 million annually for transportation needs if the Supreme Court ruling is changed.
The MEC has proposed a program to spend $375 million annually.
But during a Thursday news conference, the MEC endorsed the House plan. Scott Waller, the chief operations officer for MEC, said “The bill was a big, big boost for our infrastructure.”
After the news conference, which included Gunn, House members and others touting more spending on transportation, Sen. Hob Bryan, D-Amory, took the podium to agree additional money is needed for infrastructure.
But he questioned why many groups now calling for more revenue for infrastructure also were touting the numerous tax cuts passed by the Legislature in recent years. He cited tax cuts for out of state corporations, on whiskey and for the construction of shopping malls as the reason the state does not have enough funds to address the transportation needs.
“You simply cannot give away hundreds of millions a year…and have enough money to run government,” he said.