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Special Legislative Session Update

State Legislature Passes Historic Innovative Infrastructure Package for Local Government

By Steve Gray, MAS Director of Governmental Affairs

After three days of tactical strategies and intense debates, the Mississippi State Legislature successfully passed landmark legislation directly benefiting counties. House Bill 1 of the 2018 First Extraordinary Session, titled the Mississippi Infrastructure Modernization Act of 2018 (MIMA), is positioned to provide Mississippi counties with an entirely new stream of revenue as it relates to the State’s use tax.

Of the numerous provisions contained in this law, one of the most long-term, impactful provisions will divert 35% of the use tax to cities and counties: 15% will be diverted to cities based on a special formula, and 15% will be diverted to counties based on a formula similar to the State Aid road formula. This diversion will be collected by the Department of Revenue and then distributed to the counties. NOTE: This revenue will not go through State Aid or MDOT, but directly to counties from the Department of Revenue.  The remaining 5% will be diverted into the Local Systems Bridge Program (LSBP).

Acquiring the use tax diversion to Mississippi counties will depend on how much a county may be eligible for based on the State Aid formula, in addition to how much a county spent on infrastructure the previous year. For instance, if County A is eligible to draw down $500,000 based on its diversion portion from the State Aid formula, and County A only spent $250,000 on infrastructure the previous year, then County A can only draw down the $250,000 that was spent the previous year. This fund will be a revolving, replenishing fund for counties based on each county’s annual infrastructure spending.

NOTE: The revenue accumulated for the 15% diversion fund will be phased in as the fund builds, beginning with 3.75% the first year and adding an additional 3.75% each year for the next four years, to reach the maximum 15% diversion. Revenue from the fund will be eligible for disbursement twice a year, once in January and once in July. 

While it will take some time to establish and grow the fund, counties will not have to wait four years for the fund to reach its maximum 15% diversion to access their eligible portion. Counties will be able to draw from the fund as it grows, based on the maximum allowed amount under the funding formula.   

MIMA will also allow counties to expend revenue on deficient bridges in the State Aid Road System and LSBP system that have a sufficiency rating of less than 50% during calendar year 2019 (last year of the current term). Additionally, MIMA contains a provision that will allow counties with LSBP bridges in good sufficient standing to continue using LSBP funds on State Aid bridges. When the State Aid bridges are in sufficient repair, then such monies may be utilized for the repair of roads on the State Aid Road System or the local road system.

There are other aspects of HB 1/MIMA that can help county funding, such as bonding through what is titled the “Emergency Road and Bridge Repair Fund.” This fund will be administered through MDOT for state, city and county emergency infrastructure projects. The bonding amount will total $250 Million. Attached to the Emergency Road and Bridge Repair Fund is an advisory board that consists of the major stakeholders in the infrastructure/transportation arena. MAS is one of the stakeholders listed in HB 1/MIMA to serve on the advisory board.

HB 1/MIMA originated in the House of Representative and first passed the House by a vote of 109 to 5. After the Senate offered a few minor changes, HB 1/MIMA passed the Senate by a vote of 49 to 3. When the bill was sent back to the House, the House concurred on the Senate changes and gave it a final bipartisan vote of 109 to 4, sending the measure to the Governor for his signature.   

I would like all MAS members for their strong participation in the legislative process during this Special Legislative Session. This Association’s membership made a strong impression at the Capitol during the first day of the Special Session and got the attention of many legislators as well as other stakeholders, special interest groups, and media outlets.

From Capitol visits, to phone calls, text messages and passing county board resolutions, everyone was on message and on one accord. This was a truly unified effort – 82 Counties, 1 Voice!

Join us at the 2018 Fall Educational Workshop in Tupelo (October 9-11) for a detailed discussion of this legislation and its impact on counties. 

Below are other provisions presented in HB 1/MIMA from the Special Legislative Session.

  • Creates a new tax on hybrid and electric cars. Electric auto owners would pay $150 per year, hybrid owners $75 per year.
  • Uses newly legalized casino sports betting taxes, as well as revenue collected from the lottery, to pay down the bond debt on the “Emergency Road and Bridge Repair Fund.”
  • Removes a provision that requires the abatement of the environmental protection fee levied on bonded distributors of motor fuel when the unobligated balance in the Mississippi Groundwater Protection Trust Fund reaches or exceeds $10 Million.
  • Requires the Department of Audit to conduct and/or enter into contracts for a performance audit of any projects under the Mississippi Department of Transportation. The performance audit must be completed by not later than December 31, 2019. The Department of Audit will be reimbursed for all expenses of the audit by the Mississippi Department of Transportation.
  • This bill goes into effect upon passage.