Car Tag Budget

Published 12:00 am Friday, April 3, 2009

Legislature will fix car tag budget, says state rep

By Billy Davis

If the price of automobile tags jumps beginning July 1, when the state’s fiscal year begins, Panola County officials want the public to know their fingerprints will not be found anywhere on the issue.

“Please tell people, if this happens, that we didn’t cause it,” County Administrator Kelley Magee told The Panolian – twice – this week regarding the issue of automobile tags. 

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Magee voiced concern because Mississippi lawmakers recessed their regular session Tuesday without funding the state program, the Car Tag Reduction Fund, which offsets the cost of car tags. 

But state Rep. Warner McBride said Thursday that state lawmakers plan to return to Jackson, perhaps in May, to continue work on the new state budget.

Legislators recessed also with a stated plan to return once the state learns clear guidelines for spending the $3 billion in federal stimulus funds that have been allocated for Mississippi, according to McBride.

The current recess will also give legislators time to watch the struggling economy and react accordingly when the budget is finalized, he also said.

“When we go back into session, car tags will be a priority,” McBride told The Panolian.

To make up for the expected cart tag fund shortfall, the State Tax Commission has suggested increasing the amount taxpayers pay for the automobile tag and decreasing the state’s expense, the legislator said. But lawmakers will work to ensure taxpayers are not burdened with a costlier tag after July 1.

“We want to eliminate as much of the burden – hopefully the entire burden – as we can,” he said.

Mississippi’s Car Tag Reduction Fund began in 1994 to help automobile owners save money when purchasing an annual car tag from the county tax collector. To offset the loss in county revenue, the State Tax Commission reimburses the counties each month with a “car tag credit.”

The state’s car tag credit is funded when a buyer purchases an automobile, new or used, from a dealer, explained deputy tax collector Billy Bright.

“When you buy the car, the tax is five percent. Two percent of that goes into the fund,” he said.

But the current recession has hurt new car sales, and the State Tax Commission owes counties more than $7.2 million in tag credits through February, The Clarion-Ledger has reported.

Panola County is currently owed $72,907 from the State Tax Commission, “and they’re a month behind,” Bright said.

In Panola County, the assessed value of automobiles is $1.5 million less than the previous fiscal year, indicating fewer new car sales, according to figures Magee recently showed supervisors at a recess meeting.

Bright and the county tax collector’s office provided the figures, which compared the first five-month period in 2007-2008 with 2008-2009.

Mississippi lawmakers have said the State Tax Commission needs $25 million to stay afloat, but the State Tax Commission has said it needs $33 million in the next fiscal year to make up the shortfall.

Lawmakers were hoping to use revenue from a tobacco tax increase to fund the car tag fund, but that tax hike died last week when the House and Senate failed to reach a compromise on how much to raise the tax.

Negotiations are ongoing to salvage a compromise, McBride reported Thursday.

State government is trying to make up a predicted shortfall of $100 million during the current fiscal year.

The shortfall predicted for the new fiscal year is $400 million, McBride said.

“I’ve never seen the shortfall we’re experiencing now,” said McBride, who has served in the District 10 seat since 1992.