House makes U-turn on tax break for homeowners

JACKSON, Miss. (AP) - Hours after a House committee passed a costly bill to increase property tax exemptions for homeowners, House leaders killed it.

House Bill 36 would have increased homestead exemptions from $300 to $360 each year. It was sent back to die in the Ways and Means Committee on a voice vote.

“We just can’t afford it,” House Speaker Philip Gunn, R-Clinton, told The Associated Press of the $69 million price tag.

Ways and Means Committee Chairman Jeff Smith, R-Columbus, said approving the bill could endanger one of Gunn’s signature 2014 priorities, an across-the-board pay raise for public school teachers. Any significant teacher pay raise would costs tens of millions of dollars.

“It would jeopardize the teacher pay raise,” Smith said after the decision was made to kill the bill. “It’s too rich for our blood.”

Over the two years since Republicans took control of the House of Representatives, giving them control of both houses of the Legislature and the governor’s office, the state has approved tens of millions in tax breaks. The Department of Revenue counted 11 tax breaks granted by the Legislature in 2013.

But some members, including House Appropriations Committee Chairman Herb Frierson, R-Poplarville, have warned that increasing tax breaks are hurting the Legislature’s ability to pay for state functions.

That tension was evident Wednesday in the Ways and Means Committee. Rep. Steve Holland, D-Plantersville, asked Smith to keep a running tally of all the tax breaks on a chalkboard in the Ways and Means meeting room.

“It looks like to me, in today’s deliberation, we’ve already taken $69 million off the table,” Holland said, saying that would hurt efforts to fund the teacher pay increase.

After the meeting, Holland noted the bill’s passage in pink chalk, writing that it was a “raid” on the state’s general fund.

Frierson, after it was announced that the bill would be killed, said he expected less conflict in 2014 between tax cuts and funding state services. He said he didn’t play any part in rejecting the measure

In the bill, the first $75,000 in value of a home owned by people older than 65 would have been exempted from taxes, up from the first $60,000. Seniors who are also disabled would have seen their exemption rise to $90,000 of value from $75,000.

The state is spending $81.1 million to pay for the current homestead exemptions this year, but it would cost $87.8 million to fully fund the tax breaks, meaning counties and school districts are absorbing about 8 percent of the cost. Lawmakers had recommended increasing the amount to $84.5 million in the 2015 budget before discussions of increasing the amount began.

County supervisors warned tax rates would rise if lawmakers didn’t contribute enough to make up for lost revenue to counties and school districts.

“The reality is, if they don’t fully fund it, the counties and the school districts are out that reimbursement,” Jackson County Supervisor Mike Mangum said.

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Online: House Bill 36: https://bit.ly/1aJHXV8

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Follow Jeff Amy at: https://twitter.com/jeffamy