Meridian and Lauderdale County officials on Monday discussed several items they would like to see the state Legislature address as leaders from around the state meet in Jackson.
At a Council of Governments meeting, Meridian City Councilman George Thomas said there were several priorities sent out by the Mississippi Municipal League, a member organization for municipalities that provides training and lobbying, including revising how internet use tax funding can be spent, fully funding homestead exemption reimbursements and addressing a planned increase in employers’ contributions into the Public Employee Retirement system.
Internet use tax
Internet use tax is a 7% tax that is collected from online purchases. It was first created by the state Legislature in 2018 and fully phased in over the next four years. In 2023, the first year the tax was fully phased in and cities received their full allocation, Meridian took in approximately $3 million in use tax funds.
The city has already earmarked roughly half of its internet use tax money to pay debt service on two $6 million paving bonds passed in 2020 and 2021.
In creating the tax, legislators restricted the use tax money to projects involving road and bridge infrastructure. Thomas said MML is hoping legislators will revisit the law and allow the funds to be spend on a range of projects and needs.
Homestead exemption
Another legislative priority for MML is the full funding of homestead exemption reimbursements. Homestead exemptions reduce the amount of property taxes residents are charged each year. Under the law, the state is supposed to reimburse local governments for some of the lost tax revenue from reducing the tax amount, but the state Legislature hasn’t been reliable in giving cities and counties their due.
Lauderdale County Deputy Tax Assessor Whitney Hodges on Monday said the lost revenue to both the county and city of Meridian is likely several hundred thousand dollars.
Public Employee Retirement System
Mississippi’s Public Employee Retirement System, more commonly called PERS, is the pension system for most city, county, public school, university and state government employees. The system has struggled with fewer workers paying into the system and questions raised about its longterm viability.
As one part of the solution, the PERS board, which is tasked with managing the retirement fund, voted in December 2022 to increase the amount employers pay into the fund from 17.4% to 22.4% effective in October 2023. After pressure from state officials, the board agreed to postpone the increase until July 2024.
Thomas said the increase locally will add an additional $2 million to the city’s payroll costs each year, and further increases could cost the city as much as $5 to $10 million annually.
State legislators are expected to address the PERS issue in the current session, with discussion of a potential one-time cash infusion into the state retirement system softening the blow on local governments throughout the state. PERS currently has enough money to pay 61% of its obligations, with the recommended ratio being at or above 80%.
Other legislative priorities include:
•increasing the sales tax diversion to municipalities;
•adding a local option sales tax;
•increasing the amount local governments can spend before requiring competing bids;
•developing a loan or grant program to deal with abandoned or dilapidated properties;
•additional funding for the Emergency Road and Bridge Repair program; and
•funding the Small Municipalities Grant program.