For the first six months of the current fiscal year, which started on July 1, the state has collected $53.1 million in taxes on liquor and wine – an increase of 30% over the previous year. And for the previous fiscal year, liquor and wine taxes were up 9% thanks primarily to the strong sales that occurred late in the fiscal year that ended June 30 as the coronavirus ramped up in the state.
In fairness to Mississippians, though, they are not just sitting around drinking. Graham pointed out, based on his personal observations, that the sales of toilet tissue, exercise equipment and home building supplies also were up.
Indeed, state revenue reports compiled by legislative staffers reveal that people are shopping more. Sales tax collections to the state — generated from the 7% tax levied on most retail items — are up 4.6% to a little more than $1 billion. People especially are shopping online. Use tax collections from the 7% tax on items purchased online are up 40.3% to $204.5 million. Use tax collections continue to be one of the fastest — if not the fastest — growing revenue streams for the state.
Overall, revenue collections are up $236.1 million or 8.4%.
When the pandemic hit and many businesses were impacted by a slowdown, the fear was that revenue collections would take a dramatic nosedive, forcing a reduction in vital state services in such areas as education, health care and law enforcement. But that revenue nosedive did not occur.
Former State Economist Darrin Webb, who retired last year, earlier said that collections were buoyed in part by the extra $600 per week in unemployment benefits and stimulus payments provided by federal legislation. In a poor state like Mississippi, with a large segment of its populace working in low paying jobs, the federal funds were a major boost.
In addition, Mississippi — to the dismay of many — has the highest state-imposed sales tax on food. With people staying home more, they most likely were purchasing more food helping to increase sales tax revenues.
And apparently if Mississippians were eating at home, they wanted some liquor or wine to go with their meals.
The result is that instead of legislators having to cut budgets as was feared this past summer, they now are making plans to provide a $1,000 per year pay raise to teachers, costing about $51 million annually.
The rosy state revenue report belies the fact that many Mississippians are hurting economically, especially since the federal stimulus funds have been cut or are beginning to be exhausted. Some believe the situation will get much worse not only for Mississippians but for state revenue collections if additional federal stimulus is not provided in the coming weeks. And, of course, if revenue collections decline that could lead to a cut in those vital services.
But based on what has happened thus far, legislators are hopeful they are not facing the specter of those budget cuts and are even planning a major investment in education in terms of teacher pay.
After all, many sources of state revenue collections — liquor and others — are on the rise. And many believe with the Legislature in session, at least the sale of liquor will continue to rise.
