The proceeds from a new state lottery? A dedicated portion of the new online sales tax collections? A portion of gaming revenues from the newly minted sports book in Mississippi casinos? Borrowed or bonded revenues? Maybe a portion of the BP oil spill settlement funds as well?

The 2018 special session of the Mississippi Legislature is shaping up to be a mixed bag of new and alternative revenue measures some two years after Gov. Phil Bryant signed the largest tax cut in state history into law in May, 2016. The tax cut package, known as Senate Bill 2858 or the “Taxpayer Pay Raise Act,” represents a 10-year package of tax cuts that when fully deployed over 10 years will do three main things.

First, it will eliminate the 3 percent individual income and corporate income tax brackets. Second, the tax cut package eliminates the corporate franchise tax. Third, the plan allows self-employed taxpayers to exempt themselves on their state tax returns from a portion of their federal self-employment tax.

The state’s business lobby almost unanimously applauded the Republican-backed tax cut package as sound fiscal policy and as one that would spur investment, job creation and bring Mississippi into a far more competitive economic development posture with the majority of competing states in the South.

Democrats in the Legislature questioned the wisdom of eliminating the franchise tax, point to the average annual $260 million it was bringing in at a times when the state was struggling to meet revenue estimates. More to the point, detractors of the plan cited projections suggesting that the GOP tax cuts would reduce state revenue $46.5 million in Fiscal Year 2019, $70.8 million in FY 2022, and by full implementation in 2028, an annual $415 million.

This week’s special session offers alternative revenue measures that certainly won’t fully offset the 2016 tax cut package, but it does appear to be a plan that can stabilize state government finance — and not just in the guise of addressing infrastructure needs.

Earlier this year, the Supreme Court brought online sales and use tax law fairness to mom-and-pop merchants on Main Street who had long been at a 7 percent price disadvantage in Mississippi in competition with out-of-state online retailers. In doing so, it gave the Legislature political cover to do something most knew they already needed to do – to stanch the certain decline of traditional sales tax revenue as online sales increased.

Giving a healthy portion of those online sales and use tax collections to city and county governments makes sense in terms of helping those governments avoid hiking local taxes. In Fiscal Years 2016 and 2017, sales tax collections accounted for 38 percent of the state’s General Fund receipts as the State Department of Revenue collected $2.062 billion in sales taxes in FY 2016 and $2.055 billion in 2017. Twenty years ago, that General Fund percentage was 41 percent.

A state lottery has been favored by a majority of Mississippians for more than 30 years according to polling. Mississippi lawmakers resisted, first on religious grounds and later to protect the interests of the dockside casinos they approved in 1990 and later saw expand. Studies and industry estimates claim that a Mississippi lottery would generate between $100 million to $150 million in general fund revenues and slow or stop state taxpayers from going across state lines to buy lottery tickets in Louisiana, Arkansas, Tennessee and Florida.

With the introduction of the sports book into Mississippi casinos and a head start on other states to boot, the lottery vote becomes easier for lawmakers because the sports book is likely to generate far more casino industry revenue gains that a lottery program would take away from them.

The apparent BP oil settlement compromise was a big part of getting the Legislature on the same page. So is the promised of $300 million in bonded or borrowed funds.

Finally, there comes the fact that the state’s infrastructure is in dire straits and no one in the executive or legislative branch of government wants to wage 2019 campaigns with the issue unaddressed and with no firm plan in place to at least offer hopes of improvements.

Like the tax cut package in 2016, the 2018 alternative revenue package is still evolving and there are no guarantees. But the special session package appears to move the state’s long term government finance footing on far more solid ground that it was at the end of the 2018 regular session.

Sid Salter is a syndicated columnist. Contact him at sidsalter@sidsalter.com.