Use tax; amend purposes for which special fund monies to municipalities may be expended.

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To: Finance
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Senator(s) Turner-Ford, Simmons (12th),
McMahan, Simmons (13th)

SENATE BILL NO. 2191

AN ACT TO AMEND SECTION 27-67-35, MISSISSIPPI CODE OF 1972, 1
TO REVISE THE PURPOSES FOR WHICH SPECIAL FUND MONIES FROM USE TAX 2
REVENUE DISTRIBUTIONS TO MUNICIPALITIES MAY BE EXPENDED; AND FOR 3
RELATED PURPOSES. 4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 5
SECTION 1. Section 27-67-35, Mississippi Code of 1972, is 6
amended as follows: 7
27-67-35. (1) (a) There is hereby created a special fund 8
in the State Treasury. The fund shall be maintained by the State 9
Treasurer as a separate and special fund, separate and apart from 10
the General Fund of the state. The fund shall consist of monies 11
deposited therein under Section 27-67-31(e) and monies from any 12
other source designated for deposit into such fund. Monies in the 13
fund shall be expended by the department to provide funds to 14
assist municipalities in this state in paying costs associated 15
with: 16
(i) Repair, maintenance and/or reconstruction of 17
roads, streets, sidewalks and bridges, and acquisition, 18
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construction and/or rehabilitation of buildings, in 19
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) * * *. 32
Unexpended amounts remaining in the fund at the end of a fiscal 33
year shall not lapse into the State General Fund, and any interest 34
earned or investment earnings on amounts in the fund shall be 35
deposited to the credit of the fund. 36
(b) (i) Subject to the provisions of this paragraph 37
(b) and Section 65-21-31, funds provided to municipalities under 38
this subsection (1) shall be allocated and distributed to 39
municipalities as follows: 40
1. Three Million Dollars ($3,000,000.00) 41
shall be allocated to all municipalities in equal shares, and 42
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2. The remainder of the funds allocated as 43
follows: 44
a. One-half (1/2) shall be allocated to 45
municipalities based on the proportion that the population of a 46
municipality according to the most recent federal decennial census 47
bears to the total population of all municipalities in the state 48
according to the most recent federal decennial census, and 49
b. One-half (1/2) shall be allocated to 50
municipalities based on the proportion that the amount of sales 51
tax revenue distributed to a municipality during the preceding 52
fiscal year under Section 27-65-75(1)(a) bears to the total amount 53
of sales tax revenue distributed to all municipalities during the 54
preceding fiscal year under Section 27-65-75(1)(a). The 55
department shall distribute funds under this subsection (1) on a 56
semiannual basis with distributions being made in the months of 57
January and July. 58
(ii) In order to be eligible to receive the full 59
amount of funds allocated for distribution to a municipality 60
during a year under this subsection (1), the municipality must 61
have expended an amount not less than the amount of base 62
expenditures during the previous municipal fiscal year for the 63
purposes described in paragraph (a) of this subsection (1). If a 64
municipality fails to expend such required amount, then the amount 65
of funds allocated for distribution to the municipality shall be 66
reduced by the percentage by which the municipality failed to 67
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expend the amount of base expenditures. For the purposes of this 68
subsection (1), "base expenditures" means the average annual 69
expenditures made by a municipality for purposes described in 70
paragraph (a) of this subsection (1) for the two-year period 71
beginning October 1, 2020, and ending September 30, 2022. 72
Expenditure of grant proceeds, loan proceeds, or the proceeds of 73
bonds issued by a municipality for the purposes described in 74
paragraph (a) of this subsection (1) shall not be considered when 75
calculating the base period. Expenditures by a municipality for 76
purposes described in paragraph (a) of this subsection (1) and for 77
which the municipality may not use monies received from the 78
department under this subsection (1), may be considered when 79
calculating the amount of funds expended by the municipality 80
during the previous municipal fiscal year, provided the 81
expenditures are related to the purposes described in 82
subparagraphs (i), (ii) and/or (iii) in paragraph (a) of this 83
subsection (1). Beginning July 1, 2023, and each succeeding July 84
1 thereafter, the amount of the base expenditures shall be 85
adjusted and compounded annually by increasing or decreasing such 86
amount by a percentage amount that is equal to the lesser of 87
one-half percent (0.5%) or to the United States inflation rate for 88
the previous calendar year ending on December 31 as certified by 89
the department and provided to the municipalities thereby within 90
thirty (30) days of such certification. The United States 91
inflation rate for a calendar year shall be the Consumer Price 92
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Index for the calendar year for urban consumers as calculated by 93
the Bureau of Labor Statistics of the United States Department of 94
Labor. 95
(c) The department and the Office of the State Auditor 96
shall have all powers necessary to ensure the proper 97
implementation of this subsection (1). 98
(2) (a) There is hereby created a special fund in the State 99
Treasury. The fund shall be maintained by the State Treasurer as 100
a separate and special fund, separate and apart from the General 101
Fund of the state. The fund shall consist of monies deposited 102
therein under Section 27-67-31(f) and monies from any other source 103
designated for deposit into such fund. Monies in the fund shall 104
be expended by the department to provide funds to assist counties 105
in this state in paying costs associated with (i) the repair, 106
maintenance and/or reconstruction of roads, streets and bridges in 107
counties, and/or (ii) as a pledge to pay all or a portion of debt 108
service on debt issued by a county for the purposes provided in 109
this subsection (2)(a). These monies shall not be used for 110
salaries, benefits or any form of compensation for employees, or 111
for contract employees, administrative costs, debt service except 112
as provided in this subsection (2)(a), personal property or 113
equipment except for personal property or equipment to be used for 114
the purposes allowed in subparagraph (i) of this subsection 115
(2)(a), or for the construction or maintenance of public buildings 116
or other structures that are not integral to the system of roads 117
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and bridges. Unexpended amounts remaining in the fund at the end 118
of a fiscal year shall not lapse into the State General Fund, and 119
any interest earned or investment earnings on amounts in the fund 120
shall be deposited to the credit of the fund. 121
(b) (i) Subject to the provisions of this paragraph 122
(b) and Section 65-21-31, funds provided to counties under this 123
subsection (2) shall be allocated and distributed to counties in 124
the following proportions: 125
1. One-third (1/3) shall be allocated to all 126
counties in equal shares, 127
2. One-third (1/3) shall be allocated to 128
counties based on the proportion that the total number of rural 129
road miles in a county bears to the total number of rural road 130
miles in all counties of the state, and 131
3. One-third (1/3) shall be allocated to 132
counties based on the proportion that the rural population of a 133
county bears to the total rural population in all counties of the 134
state, according to the latest federal decennial census. 135
The department shall distribute funds under this subsection (2) on 136
a semiannual basis with distributions being made in the months of 137
January and July. Rural road miles and rural road population in 138
the counties shall be determined in the same manner as they are 139
determined for the purposes of the distribution formula in Section 140
65-9-3. 141
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ST: Use tax; amend purposes for which special
fund monies to municipalities may be expended.
(ii) From and after July 1, 2020, of the funds 142
allocated for distribution to a county during a year under this 143
subsection (2), the maximum amount of such funds that may be 144
distributed to the county during that year shall not exceed the 145
amount of county funds expended by the county during the previous 146
county fiscal year for purposes described in paragraph (a) of this 147
subsection (2). Expenditure of the proceeds of bonds issued by a 148
county to pay costs associated with the repair, maintenance and/or 149
reconstruction of roads, streets and bridges shall not be 150
considered when determining the amount of county funds expended by 151
the county during the previous county fiscal year. Expenditures 152
by a county for purposes described in paragraph (a) of this 153
subsection (2) and for which the county may not use monies 154
received from the department under this subsection (2), may be 155
considered when calculating the amount of county funds expended by 156
the county during the previous county fiscal year, provided the 157
expenditures are related to purposes described in subparagraphs 158
(i) and/or (ii) in paragraph (a) of this subsection (2). 159
(c) The department and the Office of the State Auditor 160
shall have all powers necessary to ensure the proper 161
implementation of this subsection (2). 162
SECTION 2. This act shall take effect and be in force from 163
and after July 1, 2026. 164