JACKSON — Leaders of two of Mississippi’s most politically active associations of public officials are approaching the 2011 session with similar views — an election-year Legislature is no arena for new, expensive ideas.
“You can’t have a huge agenda during a year like this,” said Derrick Surrette, executive director of the Mississippi Association of Supervisors, whose 410 members are also up for election in 2011.
“We’re very careful about asking for anything and very careful about trying to keep what we got,” said George Lewis, executive director of the Mississippi Municipal League.
Both groups, however, intend to watch for anything that may erode local tax bases.
Cities and counties agree lawmakers urgently need to address the controversy over Section 42 housing tax breaks, Surrette said. Figures from the Mississippi Home Corporation, which oversees the program, show there were $8 million of federal tax credits given this year on 1,401 units.
The Legislature embraced the housing tax credit program in 2005. An effort earlier this year to repeal the tax break died in the Senate when developers and local officials couldn’t compromise.
So-called Section 42 developers use federal tax credits to build rental complexes for people who qualify for affordable housing.
Under the law, the developers are assessed by the income generated from the rental units rather than the cost of the real property. That formula causes counties to assess other taxpayers at higher rates to make up the difference, local officials contend.
Surrette said more Mississippians are moving into Section 42 housing while using county and city services. However, the owners of those properties are not paying an equal amount of property tax.
When that occurs, Surrette said supervisors, struggling with their own budgets, are faced with requests from the school districts — also funded from property taxes — to increase the levies to offset not only the local revenue losses but also funding reductions from the state level.
“It is an unfunded mandate that requires a local tax increase,” Surrette said.
Lewis said a failure by the 2011 Legislature to act on Section 42 housing tax credits could result in litigation down the road.
“There is no other industry taxed in Mississippi like they are,” Lewis said of Section 42 developers.
“There is some movement on some legislation that the (property) owners and a coalition of the municipalities with the assessors and collectors and supervisors working to come up with a solution,” Lewis said.
Lewis said the failure of legislation this year in the Senate means the Senate “is our hill to climb.”
Homestead exemption is a perennial issue for local governments.
Under homestead exemption, the state encourages people to own homes by exempting the houses from some property taxes. State law provides an exemption on the first $75,000 of true value for homeowners who are totally disabled or at least 65 years old. Property reappraisals in several counties pushed some property values over $75,000, which meant some older Mississippians paid taxes for the first time in years.
The state reimburses counties and cities for lost tax revenues from homestead exemption. Those reimbursements, local officials say, have not kept pace with actual losses experienced by cities and counties.
“Last year, we had a $9 million cut — and this is for cities and counties as well — of homestead exemption reimbursement. The governor’s got another $8 million or $9 million cut in his budget this year,” Lewis said. “We’d like to hold that from last year. That’s a big thing with us.”
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