1/17/25 Legislative Update

The House unveiled HB 1, its 107-page tax reform bill, last Friday and the House Ways and Means Committee passed the bill Tuesday afternoon. The full House passed HB 1 yesterday afternoon by a vote of 88-24. Click here to see how your representative voted. HB 1 now heads to the Senate for consideration.

In addition to its other provisions, HB 1:

• Phases out the personal income tax over the next ten years
• Adds a new 1.5% sales tax on items currently taxed at 7% for a total 8.5% tax
• Steps down the sales tax on groceries from 7% to 2.5%
• Creates a 5% sales tax on fuel which is estimated to generate $400 million annually for the Mississippi Department of Transportation
• Directs the first $100 million of lottery proceeds each fiscal year to the Public Employees’ Retirement System (PERS)

Several provisions of HB 1 are promising, while others are concerning. For example, while a dedicated $100 million revenue stream is favorable for the stability of PERS, HB 1 does so via less funding for the Education Enhancement Fund (EEF). State law currently directs the first $80 million in lottery proceeds each fiscal year to roads and bridges while funds greater than $80 million are directed to the EEF for classroom supplies and early learning collaboratives. HB 1 directs the first $100 million in lottery proceeds to PERS and requires proceeds greater than $100 million to be divided 50/50 between the EEF and the Multimodal Transportation Improvement Fund (i.e., railroads, ports, and airports). This 50/50 split is on top of the additional $20 million going to PERS rather than to the EEF. While several sections of HB 1 direct funds to the EEF, it is uncertain as to if the loss of lottery proceeds to the EEF will be offset by the provisions of these sections.

The Senate Appropriations Committee held several subcommittee meetings this week with various agencies to discuss their Fiscal Year 2026 budget requests. During a budget hearing for the Institutions of Higher Learning (IHL) Tuesday morning, Commissioner Al Rankins shared faculty salaries are at 77% of the SREB average and the gap is widening which makes it more challenging for our colleges and universities to recruit and retain faculty. During its budget hearing Wednesday afternoon, Community College Board (CCB) officials shared Mississippi community colleges have an average salary of $51,000 while the SREB average is $56,000 and the national average is $67,000. IHL and CCB both requested pay raises for their faculty and staff in Fiscal Year 2026.

Most committees should begin meeting next week, as general bills must be introduced and referred to committee(s) by Monday, January 20, and committees must then consider and pass general bills originating in their own chamber (i.e., House or Senate) by Tuesday, February 4.

Governor Reeves has set March 25, 2025, for special elections to fill two vacant House seats following the deaths of Rep. Andy Stepp of HD 23 (Calhoun, Lafayette, Pontotoc and Webster counties) and Rep. Charles Young of HD 82 (Lauderdale County).

As a reminder, the "Legislators by School District" page of our website provides contact information for those legislators who represent each local school district. You may always leave a message for any House or Senate member with the capitol switchboard at 601-359-3770.