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To: Ways and Means
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026
By: Representative Lamar
COMMITTEE SUBSTITUTE
FOR
HOUSE BILL NO. 1386
AN ACT TO AMEND SECTION 27-67-35, MISSISSIPPI CODE OF 1972, 1
TO AUTHORIZE MUNICIPALITIES TO EXPEND MONIES IN A SPECIAL FUND 2
CONSISTING OF USE TAX REVENUE DISTRIBUTIONS FOR THE REPAIR, 3
MAINTENANCE AND/OR RECONSTRUCTION OF SIDEWALKS; AND FOR RELATED 4
PURPOSES. 5
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 6
SECTION 1. Section 27-67-35, Mississippi Code of 1972, is 7
amended as follows: 8
27-67-35. (1) (a) There is hereby created a special fund 9
in the State Treasury. The fund shall be maintained by the State 10
Treasurer as a separate and special fund, separate and apart from 11
the General Fund of the state. The fund shall consist of monies 12
deposited therein under Section 27-67-31(e) and monies from any 13
other source designated for deposit into such fund. Monies in the 14
fund shall be expended by the department to provide funds to 15
assist municipalities in this state in paying costs associated 16
with: 17
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(i) Repair, maintenance and/or reconstruction of 18
roads, streets, sidewalks, and bridges, and acquisition and/or 19
rehabilitation of buildings, in municipalities; 20
(ii) Repair, maintenance and/or other improvements 21
to water infrastructure and sewer infrastructure, including storm 22
water and drainage improvements; and/or 23
(iii) As a pledge to pay all or a portion of debt 24
service on debt issued by a municipality for the purposes provided 25
in this subsection (1)(a). 26
These monies shall not be used for salaries, benefits or any 27
form of compensation for employees, or for contract employees, 28
administrative costs, debt service except as provided in this 29
subsection (1)(a), personal property or equipment except for 30
personal property or equipment to be used for the purposes allowed 31
in subparagraphs (i) and (ii) of this subsection (1)(a), or for 32
the construction or maintenance of public buildings or other 33
structures that are not integral to the system of roads and 34
bridges. Unexpended amounts remaining in the fund at the end of a 35
fiscal year shall not lapse into the State General Fund, and any 36
interest earned or investment earnings on amounts in the fund 37
shall be deposited to the credit of the fund. 38
(b) (i) Subject to the provisions of this paragraph 39
(b) and Section 65-21-31, funds provided to municipalities under 40
this subsection (1) shall be allocated and distributed to 41
municipalities as follows: 42
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1. Three Million Dollars ($3,000,000.00) 43
shall be allocated to all municipalities in equal shares, and 44
2. The remainder of the funds allocated as 45
follows: 46
a. One-half (1/2) shall be allocated to 47
municipalities based on the proportion that the population of a 48
municipality according to the most recent federal decennial census 49
bears to the total population of all municipalities in the state 50
according to the most recent federal decennial census, and 51
b. One-half (1/2) shall be allocated to 52
municipalities based on the proportion that the amount of sales 53
tax revenue distributed to a municipality during the preceding 54
fiscal year under Section 27-65-75(1)(a) bears to the total amount 55
of sales tax revenue distributed to all municipalities during the 56
preceding fiscal year under Section 27-65-75(1)(a). The 57
department shall distribute funds under this subsection (1) on a 58
semiannual basis with distributions being made in the months of 59
January and July. 60
(ii) In order to be eligible to receive the full 61
amount of funds allocated for distribution to a municipality 62
during a year under this subsection (1), the municipality must 63
have expended an amount not less than the amount of base 64
expenditures during the previous municipal fiscal year for the 65
purposes described in paragraph (a) of this subsection (1). If a 66
municipality fails to expend such required amount, then the amount 67
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of funds allocated for distribution to the municipality shall be 68
reduced by the percentage by which the municipality failed to 69
expend the amount of base expenditures. For the purposes of this 70
subsection (1), "base expenditures" means the average annual 71
expenditures made by a municipality for purposes described in 72
paragraph (a) of this subsection (1) for the two-year period 73
beginning October 1, 2020, and ending September 30, 2022. 74
Expenditure of grant proceeds, loan proceeds, or the proceeds of 75
bonds issued by a municipality for the purposes described in 76
paragraph (a) of this subsection (1) shall not be considered when 77
calculating the base period. Expenditures by a municipality for 78
purposes described in paragraph (a) of this subsection (1) and for 79
which the municipality may not use monies received from the 80
department under this subsection (1), may be considered when 81
calculating the amount of funds expended by the municipality 82
during the previous municipal fiscal year, provided the 83
expenditures are related to the purposes described in 84
subparagraphs (i), (ii) and/or (iii) in paragraph (a) of this 85
subsection (1). Beginning July 1, 2023, and each succeeding July 86
1 thereafter, the amount of the base expenditures shall be 87
adjusted and compounded annually by increasing or decreasing such 88
amount by a percentage amount that is equal to the lesser of 89
one-half percent (0.5%) or to the United States inflation rate for 90
the previous calendar year ending on December 31 as certified by 91
the department and provided to the municipalities thereby within 92
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thirty (30) days of such certification. The United States 93
inflation rate for a calendar year shall be the Consumer Price 94
Index for the calendar year for urban consumers as calculated by 95
the Bureau of Labor Statistics of the United States Department of 96
Labor. 97
(c) The department and the Office of the State Auditor 98
shall have all powers necessary to ensure the proper 99
implementation of this subsection (1). 100
(2) (a) There is hereby created a special fund in the State 101
Treasury. The fund shall be maintained by the State Treasurer as 102
a separate and special fund, separate and apart from the General 103
Fund of the state. The fund shall consist of monies deposited 104
therein under Section 27-67-31(f) and monies from any other source 105
designated for deposit into such fund. Monies in the fund shall 106
be expended by the department to provide funds to assist counties 107
in this state in paying costs associated with (i) the repair, 108
maintenance and/or reconstruction of roads, streets and bridges in 109
counties, and/or (ii) as a pledge to pay all or a portion of debt 110
service on debt issued by a county for the purposes provided in 111
this subsection (2)(a). These monies shall not be used for 112
salaries, benefits or any form of compensation for employees, or 113
for contract employees, administrative costs, debt service except 114
as provided in this subsection (2)(a), personal property or 115
equipment except for personal property or equipment to be used for 116
the purposes allowed in subparagraph (i) of this subsection 117
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(2)(a), or for the construction or maintenance of public buildings 118
or other structures that are not integral to the system of roads 119
and bridges. Unexpended amounts remaining in the fund at the end 120
of a fiscal year shall not lapse into the State General Fund, and 121
any interest earned or investment earnings on amounts in the fund 122
shall be deposited to the credit of the fund. 123
(b) (i) Subject to the provisions of this paragraph 124
(b) and Section 65-21-31, funds provided to counties under this 125
subsection (2) shall be allocated and distributed to counties in 126
the following proportions: 127
1. One-third (1/3) shall be allocated to all 128
counties in equal shares, 129
2. One-third (1/3) shall be allocated to 130
counties based on the proportion that the total number of rural 131
road miles in a county bears to the total number of rural road 132
miles in all counties of the state, and 133
3. One-third (1/3) shall be allocated to 134
counties based on the proportion that the rural population of a 135
county bears to the total rural population in all counties of the 136
state, according to the latest federal decennial census. 137
The department shall distribute funds under this subsection (2) on 138
a semiannual basis with distributions being made in the months of 139
January and July. Rural road miles and rural road population in 140
the counties shall be determined in the same manner as they are 141
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ST: Use tax; revise authorized use of funds
distributed to municipalities for infrastructure
assistance.
determined for the purposes of the distribution formula in Section 142
65-9-3. 143
(ii) From and after July 1, 2020, of the funds 144
allocated for distribution to a county during a year under this 145
subsection (2), the maximum amount of such funds that may be 146
distributed to the county during that year shall not exceed the 147
amount of county funds expended by the county during the previous 148
county fiscal year for purposes described in paragraph (a) of this 149
subsection (2). Expenditure of the proceeds of bonds issued by a 150
county to pay costs associated with the repair, maintenance and/or 151
reconstruction of roads, streets and bridges shall not be 152
considered when determining the amount of county funds expended by 153
the county during the previous county fiscal year. Expenditures 154
by a county for purposes described in paragraph (a) of this 155
subsection (2) and for which the county may not use monies 156
received from the department under this subsection (2), may be 157
considered when calculating the amount of county funds expended by 158
the county during the previous county fiscal year, provided the 159
expenditures are related to purposes described in subparagraphs 160
(i) and/or (ii) in paragraph (a) of this subsection (2). 161
(c) The department and the Office of the State Auditor 162
shall have all powers necessary to ensure the proper 163
implementation of this subsection (2). 164
SECTION 2. This act shall take effect and be in force from 165
and after July 1, 2026. 166