Reeves pushes income tax elimination, opposes Medicaid expansion in State of the State address

Amid a likely debate between Mississippi House and Senate leaders over plans to slash state taxes, Republican Gov. Tate Reeves in his Wednesday State-of-the-State Address strongly encouraged the Legislature to pass a law that abolishes the state income tax.

“This money does not belong to the government,” Reeves said of the income tax. “It belongs to the hard-working Mississippians who earn it.”

The House last week passed a bill that phases out the state income tax, cuts the state grocery tax and raises sales taxes and gasoline taxes. The plan would, over time, cut about $1.1 billion from the state’s current $7 billion general fund money.

Speaking to a joint session of the House and Senate on the south steps of the Capitol, Reeves appeared to side with the House, stopping just shy of endorsing its plan.

“This piece of legislation – which was passed by a large bipartisan majority by the way – shows us a realistic path to eliminate the tax on work in Mississippi once and for all,” Reeves said. “Thank you to everyone who helped get this bill across the finish line in the House.”

The second-term governor did not mention the part of the House proposal that raises sales taxes and creates a new 5% gasoline tax. In the past, Reeves has said he opposes “tax swaps” that raise any taxes even if the net is a cut.

The Senate has yet to release a tax cut plan, though Republican Lt. Gov. Delbert Hosemann, the leader of the Senate, has said he plans to unveil a proposal soon. Reeves called on Hosemann and Senate leaders to “take action” on the House plan and send it to his desk.

“But please understand, doing nothing is not an option,” Reeves said. “Let’s get this done.”

Reeves, again, called on lawmakers to oppose efforts to expand Medicaid coverage to the working poor, a policy he derisively calls “welfare,” because President Donald Trump’s administration could make sweeping changes to Medicaid policy in the coming months.

“Medicaid changes, for example, are coming,” Reeves said. “What they will be, we do not yet know. But there is a large possibility that those changes will result in a greater spend by states who have enacted this type of welfare expansion.”

Medical leaders around the state have argued expansion would provide more health care options to poor Mississippians who can’t afford preventative medical care and economists have predicted that expansion would be a financial boon to the state.

Neither legislative chamber has put forward a substantive proposal to expand Medicaid coverage but both Senate Medicaid Chair Kevin Blackwell and House Medicaid Chair Missy McGee advanced “dummy” bills out of their respective committees on Wednesday that would serve as a vehicle for potential expansion legislation.

House and Senate leaders have said the reason for passing dummy bills, or bills that only bring forth the necessary code sections to meet key legislative deadlines, are also because of the uncertainty with the new Trump administration.

State Sen. David Blount, D-Jackson, delivered the Democratic response to Reeves’ address on Wednesday. He countered Reeves on income tax elimination, and asked Mississippians no matter their party to consider the need for health coverage through Medicaid expansion, more support for public schools and increased teacher pay, improving infrastructure and eliminating corruption.

“In the past few years Mississippi has cut more than one billion dollars in annual taxes,” Blount said. “Now the Governor and House Republicans want to abolish the state income tax. We believe this is irresponsible.”

Blount argued that the money Mississippi received from the federal government to aid the state during the COVID-19 pandemic has shored up Mississippi’s budget recently, but the one-time money that will soon run out.

The Hinds County lawmaker also argued that Mississippi should join the 40 other states that have passed legislation that extends Medicaid coverage to the working poor because the federal government will pay 90% of the costs.

Expansion would offer health insurance to tens of thousands of low-income working Mississippians whose income is too much to qualify for Medicaid under the state’s strict eligibility requirements but too little to afford private insurance from the marketplace.

“Just as importantly, closing the coverage gap will provide health insurance to more than 200,000 Mississippians who go to work every day in jobs that do not provide health insurance and who are one medical emergency away from bankruptcy,” Blount said.

Reeves also touted recent economic investment in the state, called on lawmakers to revise accountability models for public K-12 education and praised newly released data that showed Mississippi public school students made strides in math and reading.

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This story was originally published by Mississippi Today and distributed through a partnership with The Associated Press.