Friday, February 3 Update
Good Morning!
Update on House Bill 605: A member alert was sent out by MRPEA on January 31 regarding the dangers posed by House Bill 605 to the Public Employee Retirement System (PERS) and its beneficiaries. As of 2/2/2023 House Bill 605 has passed out of the House Appropriations Committee and sits on the House calendar. Members are urged to immediately contact their State Representative and Senator to express their concerns regarding this legislation.
What the Bill does:
–It orders that current contribution rates for employees and employers shall not be increased unless authorized by the Legislature.
–It directs PERS to present recommendations for making changes to the retirement system that would apply to future members of the system.
Background: At present, the PERS Board and staff are responsible for ensuring the financial integrity of the retirement system. A vital part of this responsibility involves reviewing and acting on reports and recommendations of the actuary hired by the Board to study and monitor the financial soundness of the system. At its meeting on December 20, 2022, the Board heard recommendations from the actuary and voted based on those recommendations to increase employer contributions during the upcoming year. This action was taken in accordance with the standard operating procedures of PERS.
Talking points when contacting legislators:
–The professional staff and Board of PERS need to make decisions to ensure the financial integrity of PERS.
–Changes do not need to be made to the PERS system that would cut benefits to retirees, now or in the future.
–Retirees oppose House Bill 605
Quick facts on PERS:
–PERS system members total 353,000.
–PERS paid $3.1 billion in retirement benefits last year.
–92 percent of all benefits paid remain in the state.
–Millions in benefit payments flow to virtually every county benefiting Mississippi’s economy at the local and state levels.
–Over the 30-year period that ended June 30, 2022, member contributions and earnings from investments provided 72% of the retirement system’s total funding.
–Each dollar “invested” by Mississippi taxpayers in the plan supports $4.50 in total economic activity in the state.
Resources:
Senators and Representatives during session – 601-359-3770
Measure Search | MISSISSIPPI LEGISLATURE (ms.gov) Read the full text of House Bill 605
Find Your State Legislators – Open States
Tag Archives: legislature
Guardian Alert: Concerning House Bill 605 Passes today’s Deadline
We just received word that House Bill 605 has passed the appropriations committee. If voted into law, this bill would allow for the legislature to have veto power over the PERS board. It would greatly hinder the PERS board’s ability to make fiscally responsible decisions for the system, as well as allow the legislature to tie the board’s hands when making contribution increases. We cannot overstate how dangerous this would be for the health of the system. We ask you to call your legislators and let them know that as a PERS member, you do not support this bill! This will affect ACTIVE members just as much as it would retired members as it would jeopardize the health of the system. Please share this with your friends and neighbors and encourage them to call as well!
Summary of House & Senate Bills
House Bill 531 would:
- Eliminate state income taxes for most taxpayers in 2023 and phase it out totally within about a decade
- Increase the sales tax on most retail items from 7% to 8.5%, an increase of 20%.
- Cut the grocery tax eventually from 7% to 4%
- Cut car tags in half, by using state tax dollars to subsidize local government car tag fees.
Senate Bill 3164 would:
- Phase-out the 4% state income tax bracket over four years. This would mean people would pay no state income tax on their first $26,600 of income, a savings of about $50 a year.
- Reduce the state grocery tax from 7% to 5%, starting in July.
- Provide up to a 5%, one-time income tax rebate in 2022 for those who paid taxes. The
rebates would range from $100 to $1,000.
- Eliminate the state fee on car tags going into the general fund, which would be about $5 off the cost of a new tag, $3.75 for renewals.
2022 Legislative Update
House Bill (HB) 531 would increase the sales tax that all Mississippians pay on
most items by 20% raising the rate from 7% to 8.5%. The House plan would eliminate
state income taxes for most taxpayers in 2023 and phase it out totally in future
years. The state income tax accounts for 1/3 of general fund revenue at present.
If you are at least 59 years old, half Mississippi does not impose income tax
on your retirement income. This includes distributions from 401ks, IRAs, pensions, deferred compensation plans, and Social Security and applies to all Mississippi retirees (in both the private and public sectors). Because your retirement income is already exempt from state income tax, retirees living on a fixed income from these sources will receive no benefit from the elimination of the state income tax while paying 20% more sales tax on most items under HB 531.
The Senate has also filed a tax cut bill: SB 3164. Overall the Senate plan has a number of elements that could benefit PERS members and other retirees but does include a phase-out of the 4% state income tax bracket and up to a 5% one- time tax rebate in 2022 only for those who paid income taxes. Further erosion of the state income tax revenues is not in the best
interest of PERS members. Tax rebates which can be implemented periodically
based on available revenues represent a more prudent approach to managing the
state’s finances. However, these rebates should be made to all Mississippians who filed a tax return, not just those who paid income tax. This would benefit all retirees including PERS members who pay substantial amounts in sales, local and other taxes each year.
Recommended Action
Oppose HB 531. Request amendment of SB 3164 by eliminating the
proposed phase-out of the 4% income tax bracket and making the tax rebate in 2022
available to all Mississippians filing a tax return, not just those who paid income tax.
Contact Speaker of the House, Phillip Gunn, Ways and Means Chairman, Trey Lamar, Lieutenant Governor, Delbert Hosemann, Senate Finance Chairman, Josh Harkins, and your local Representative and Senator at the Capitol Switchboard (601) 359-2220.
What the State Economist’s Office says
The State Economist’s Office has studied the House tax cut plan and
determined that by 2032 it would result in a loss of population and a reduction
in employment and personal income in Mississippi. By 2035 there would be a
reduction in state gross domestic product. These findings have negative implications
for current and future PERS retirees and for the state as a whole.
What state business leaders say
“The Mississippi tax environment was not high profile nor even discussed
significantly as a priority,” said a report released by the Mississippi Economic
Council at the state Capitol on Wednesday, based on dozens of meetings and hundreds
of surveys of business leaders across the state last year.”
“A businessman raised the topic (at one meeting) and dismissed it as a bad
idea (a distraction issue, but not really a hindrance to most businesses).”
State business leaders consider the lack of skilled workers, Mississippi’s image, and problems from the pandemic far more pressing issues.