August 30, 2018 10:53:46 AM
Cities and counties throughout the state will receive 15 percent of the use fee revenue collected in the state as a part of road/bridge legislation passed by the Mississippi Legislature Tuesday during its special session.
In the Golden Triangle, nine cities and the four counties are expected to receive a combined $4,486,313 they can use only for infrastructure projects.
Revenue from use tax, a form of sales tax that applies to mail order businesses, will increase exponentially after the U.S. Supreme Court ruled in June that online retailers were not exempt from collecting state taxes on sales. As a result, the state of Mississippi expects to collect $338 million in use tax on 2018 sales.
Initially, state leaders said that money would stay in the state coffers and be used for road/bridge infrastructure.
Cities, however, pushed back, saying a portion of that revenue should return to the cities just like regular sales taxes.
Columbus City Attorney Jeff Turnage drafted a resolution and distributed it to cities throughout the state calling for the Legislature to remit 18.5 percent of the user fee revenue to the cities, just as it does with sales taxes collected by in-state retailers.
Other cities, along with the Mississippi Municipal League, joined the lobbying effort, as did the Mississippi Association of Supervisors -- the latter of which lobbied to get counties a share of the use taxes.
Tuesday, the Legislature voted to return $50.7 million to both the cities and counties, 15 percent each. In the Golden Triangle, that revenue will range from $15,784 (Sturgis) to $923,461 (Columbus). The amount that will be distributed to the counties ranges from $435,461 (Noxubee) to $749,918 (Lowndes).
The initial payments will be phased in over four years -- 25 percent each year beginning in 2019. Cities and counties will receive the full 15 percent beginning in 2023.
Both city and county officials applauded the decision.
"I'm pleased," Turnage said. "I still feel like it should have been the full 18.5 percent and that it would have been unfettered, but at least this shows that the Legislature recognized that some of that money should come back to its point of origin."
Stipulations on the money
The language of the bill has some stipulations about how the revenue can be spent.
For cities, the money can be used only for roads/bridges and water/sewer repairs and improvements. The funds provided the county can be used only with a dollar-for-dollar match and only for roads and bridges.
Lowndes County Board of Supervisors President Harry Sanders said he's not concerned about the match.
"Our annual road budget is over $3 million and we spend $1 million just for asphalt every year," Sanders said. "We won't have any problem with the match. So I do think is going to be a big help. We have a lot of things we want to do with our roads."
Oktibbeha County Board of Supervisors President Orlando Trainer was a little more muted about the impact the revenue will have.
That county will receive $650,000 under the formula.
"I replaced one bridge in my district and it was a little over $400,000," Trainer said. "We'll do the best we can and try to supplement it. It's a start, and we're thankful for that. At the same time, we don't want the public to be misinformed as to how much of an impact it will have."
Columbus City Engineer Kevin Stafford said he will sit down with city officials soon to discuss how the city's estimated $923,461 will be spent.
"There are always more projects than money," Stafford said. "That never changes. But this money will certainly help us move along some projects that may have been put on the shelf for a while. We'll meet and come up with a list of priorities and go from there."
Effects on smaller cities, towns
West Point Mayor Robbie Robinson said the $302,000 his city is projected to receive will take a lot of pressure off maintaining the city's streets and water/sewer.
"We're still paying on three bonds for streets right now," Roberson said. "So this is definitely a big help. Up until now, we had concentrated on the main thoroughfares because you have to keep those in shape. Now, with this money, we may be able to do more work on streets in neighborhoods all over town. It's going to make a difference."
What was still unclear as of Wednesday is whether small towns, which rely on the county for roads/bridges and water/sewer, will actually be able to use the money earmarked for them or whether that money would be re-directed to the county.
If so, there remains a question as to whether the county would have to match those funds before spending it on infrastructure in those towns.
"That's something we are still working on," said Kathy Waterbury, associated commissioner with the Mississippi Department of Revenue.
Rep. Jeff Smith (R, Columbus) noted that the amounts provided by the Dept. of Revenue and the Legislative Budget Office are just projections.
"The use tax (estimate) was based on $335 million, which is what it was in the 2018 fiscal year that we just ended in July," Smith said. "By the time that's signed by the governor and the law kicks in, it could be up a little bit. It's not going to go down. Anyone getting three-quarters of a million dollars, by that fourth year, they're probably looking at closer to $1 million."
Starkville Mayor Lynn Spruill said the city's portion could increase beyond its $770,370 through its proposed annexation, which would add 6,000 residents to the city. Population is one of the factors used to calculate the payments.
"Even though there are 6,000 people, according to that (annexation) study, living just outside the city, without that being acknowledged, no one's getting that funding except the state," Spruill said. "We're gearing our community up to handle that level of population but we're not, in turn, getting the money that comes from having that population."
Spruill said another factor used to calculate the payments -- sales tax collections -- might also increase the city's share.
"There are several businesses, including a car dealership and hotel, in the eastern area the city is considering annexing," Spruill said.
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