Mississippi sees huge returns after investing in tax collection
Missing tax revenue was a big problem for Mississippi, but after appropriators gave the state’s tax-collection agency an extra $3.5 million, they saw a nearly 23-fold return on the investment.
The extra funding went to hiring 44 new auditors and collections agents, all with the goal of collecting back taxes, The Washington Post reports. With the extra manpower, the Mississippi Department of Revenue was able to collect $190.3 million it was owed last fiscal year – an $80.9 million increase over the year before. This figure dwarfed expectations.
“We had a little over 5 percent growth in tax revenues [last fiscal year]. We had anticipated about a half-a-percent,” Herb Frierson, chairman of the state House Appropriations Committee, told The Washington Post. “We upped that twice during the year, but we still way exceeded our highest expectation.”
Some of the additional funding will go back to the local governments where it was collected, but the majority will go to Mississippi’s general fund, which has been depleted by a weak economy, according to The Washington Post.
Securing the initial $3.5 million wasn’t easy. Frierson told The Washington Post, “It was just a hard sell among leadership.” But after some work, Frieson and other likeminded lawmakers and were able to get the backing necessary to move forward.
Initial numbers show Mississippi’s additional revenue may not be a one-time windfall. According to the Associated Press, Mississippi tax collections were 4.3 percent higher than lawmakers anticipated during July and August. That translates to an extra $26.9 million.
This is good news for Mississippi; however, Frieson is cautious in his optimism. “I hope we can sustain it,” he told the AP. “It takes you four, five or six months to see a trend.”
Mississippi isn’t the only government seeing a return on investment in tax collection infrastructure. Greenville County, S.C., invested in new data collection and analysis services to detect property tax exemption fraud. The county saw an increase of $3 million in revenue as a result. More on that story can be found in the upcoming September edition of American City & County magazine.