Budget Talks Stall As Adjournment Nears… Will Require Rule Suspension or Special Session
Gov Signs Historic Income Tax Elimination Bill … Vetoes Medicaid Tech bill
House and Senate negotiators return Monday to piece together the details of the state’s $7 billion general fund state budget but enacting it will require a procedural fix since lawmakers missed Saturday’s deadline to complete that work.
Lawmakers are facing a deadline to adjourn on or before Sunday April 6. They are likely to either: 1) suspend the rules this week to revive the budget bills, something that requires the approval of two-thirds of those voting in each chamber; 2) they could ask Gov. Tate Reeves to call a special session immediately or at some point before the new fiscal year beginning July 1. The rules suspension is the more frequently used route in recent history.
Governor Reeves Vetoes Medicaid Tech Bill
Governor Tate Reeves vetoed legislation adjusting the state’s Medicaid program, SB 2867, citing concerns about some language that would drive up costs and implement program restrictions, particularly language that he warned threatened a key funding source of the state’s teaching hospital, the University of Mississippi Medical Center. Lawmakers have alive another piece of legislation, SB 2386, they could use to address those and other concerns the governor expressed in his veto message.
Income Tax Phase Out signed into Law
Governor Tate Reeves officially signed HB 1 into law on Thursday evening, marking a major milestone in Mississippi’s efforts to eliminate the state’s personal income tax. Surrounded by Republican lawmakers at the Governor’s Mansion, Reeves called the bill a generational change and emphasized that the legislation will make Mississippi one of a few states that no longer taxes income.
Under the new law, the state’s flat income tax will drop incrementally from 4.4 percent this year to 3 percent by 2030. Starting in 2031, the tax will continue to phase out, tied to revenue growth triggers. Once fully implemented, no income earned in Mississippi will be subject to taxation.
The bill also reduces the grocery sales tax from 7 percent to 5 percent starting in July 2025 and adds approximately $200 million dollars annually for roads and bridges through a phased-in 9-cent fuel tax increase. It also creates a new set of benefits for new state employees, a 5th tier of employees, in the state retirement system, based on recommendations from the PERS Board.
House and Senate Republican leaders praised the reform, though the path to passage was not without some debate, particularly around the timing of the income tax phase-out, though some Democrats raised concerns about whether Mississippi can afford to lose that revenue long-term. Still, most Republican leaders hailed the reform as a bold step forward, saying new economic growth would make up for the lost income tax revenue, positioning Mississippi as a more competitive and business-friendly state. Governor Reeves said, “We are going to compete, and we are going to win.”
Governor Signs Paid Parental Leave Bill for State Employees
Governor Tate Reeves signed HB 1063 into law this week, extending six weeks of paid parental leave to state employees who are primary caregivers of a newborn. The policy, which takes effect January 1, 2026, brings Mississippi in line with several other conservative-led states that offer similar benefits, including Georgia, Kentucky, and Tennessee.
While the House initially proposed eight weeks for primary caregivers and two weeks for secondary caregivers, the Senate version ultimately passed both chambers with broad bipartisan support. Lawmakers noted the bill comes at no additional cost to the state, and supporters highlighted that more than 20 states, many of them led by pro-life majorities, have adopted similar policies since the Dobbs decision.
House Sends PBM Reform Bill to Conference as Debate Continues
The Mississippi House of Representatives has voted to send HB 1123 , the pharmacy benefit manager (PBM) reform bill, to a conference of negotiators from each chamber. The move comes after significant lobbying from independent pharmacists pushing for the House to accept stricter Senate language and send the bill to the governor. Speaker White signaled that more work is needed to get the policy right. Sending the bill to conference gives lawmakers additional time to sort through the complexities and hear from all sides before finalizing anything that could reshape how prescription drugs are managed in Mississippi.
Russ Latino of the Magnolia Tribune published an op-ed this week backing the Speaker’s decision and urging lawmakers to take a broader view of the issue. He cautioned against making policy changes based on anecdotal claims and reminded readers that Mississippi’s largest employers have raised concerns about how proposed regulations could affect employee health plans. Latino walked through the different players in the system, from PBMs and third-party payers to wholesale distributors and PSAOs and pointed out that PBMs operate on a much lower profit margin than many assume.
He closed by warning that reforms intended to help one part of the system, like pharmacies, may unintentionally raise costs elsewhere. While sympathetic to the challenges faced by independent pharmacists, he said lawmakers should proceed carefully and avoid rushing decisions that could create more problems than they solve. Read his full column here
Around the State
Ergon Refining Announces $400 Million Dollar Expansion in Vicksburg
Mississippi-based Ergon Refining is making a major investment in Vicksburg, announcing a $400 million dollar expansion of its refinery operations that will include gasoline production and a dual cogeneration power complex. The project, expected to be completed by 2027, will create 20 new jobs and boost the efficiency and longevity of the facility.
Governor Reeves called the move another massive win for Mississippi, pointing to it as a sign of continued economic momentum in the state. Ergon’s investment follows its recent $85 million dollar expansion in Flowood, which added 200 new jobs. Founded in Jackson, Ergon now employs more than 1,200 people in Mississippi and over 4,200 worldwide.
Vicksburg Shipyard Launches $26 Million Dollar Vessel Repair Operation
Vicksburg Shipyard, a subsidiary of Terral River Service, is bringing a new $26 million dollar vessel repair and maintenance facility to Warren County, creating at least 44 new jobs. The new operations at the Port of Vicksburg will allow the company to service its own fleet and provide maintenance to other maritime companies that previously sent work out of state.
Governor Reeves said the project strengthens Mississippi’s river commerce and is another key step in expanding the state’s blue economy. The Mississippi Development Authority is supporting the project through the MFLEX program, with additional backing from local economic development partners. Local leaders hailed the investment as a strong boost to the region’s economic strategy and workforce.
Next Major Deadline: Sunday, April 6, the Legislature is scheduled to Sine Die. The full deadline calendar can be found here
