While some area municipal officials agree a bill reducing thegrocery tax will have a detrimental effect on their budgets, butthey say the severity of the reduction will vary with each city’sdependence on sales taxes.

The Mississippi Legislature has overwhelming approved a plan toreduce and eventually eliminate the 7 percent sales tax ongroceries while increasing cigarette taxes. Gov. Haley Barbour, whohas expressed opposition to the bill, has the next move in the taxdebate.

The measure has raised some concerns about potential loss insales tax revenue if the cigarette tax increase does not offset thegrocery tax decrease.

Brookhaven officials said Monday a reduction in sales tax wouldmake the city’s wallet a bit leaner and could impact some services.Mayor Bob Massengill voiced concerns over how quickly the bill hasmoved.

“We seem to be moving awfully fast on something this major withso many unanswered questions about the state’s overall economy,”Massengill said.

Massengill said sales taxes account for approximately 60 percentof the city’s total budget, and “the grocery sales tax is aconsiderable amount of that.”

Ward Six Alderman Buddy Allen said the bill’s passage woulddeplete the city’s coffers of some income, but he didn’t believe itwould be too severe. Other sales taxes provide the lion’s share ofcity income, he said.

The tax revenue situation is much more grim in Monticello, whereofficials are certain they would have to take steps to replace thelost income. They fear having to raise property taxes or cuttingservices.

Monticello officials bluntly called a potential reduction”devastating.”

“As a consumer I like it, but as an elected official I know themoney has to come from somewhere,” said Ward Two Alderman SteveMoreman. “It won’t have the effect on larger cities, likeBrookhaven, that it will on us. The biggest thing we’ve got is ourgrocery store, and we only have one of those.”

Monticello Mayor Dave Nichols agreed.

“This bill, as it is written, is bad for cities, especially thesmaller towns in Mississippi,” he said. “I’m not against areduction of grocery taxes for anyone, but we need to do it in away that doesn’t devastate the budgets of our cities andtowns.”

At approximately $118,000 per year, grocery taxes in Monticellocomprise 9 percent of the town’s $1.3 million annual budget,Nichols said.

“I’ve got choices. I can either cut services or raise propertytaxes. Neither of which is good for the town’s future,” hesaid.

To retain existing services, Nichols said, the town would beforced to raise property taxes to make up the difference. Not onlyis that unfair to property owners, who would also be shoulderingthe load for those who do not own property, but the higher propertytaxes would also make it more difficult to recruit potentialindustries. An increase in the millage rates would also increasethe cost of car tags.

Massengill said he also supported an eventual elimination of thegrocery tax, but questioned the timing.

“All of us want to see the sales tax go down, but I’m not surethis is the right way or the right time,” he said. “I feel with thedevastation we have had on the Gulf Coast, it’s not the time tochange anything.”

Massengill also questioned how cities were expected to replacethe lost income.

Even if some of the additional funding from the cigarette taxincrease were diverted to municipalities to offset the loss, itwould still pose a problem. When luxury taxes are raised,especially tobacco, some people quit using the product, which wouldfurther decrease the amount municipalities would receive under theplan.

“We need to have some provision for growth,” he said.

State legislators are playing politics with cities’ money,Nichols said. The bill looks good on the surface, and statelegislators won’t be blamed when municipalities have to hike theirtaxes to pay for the reduction.

“Sales taxes are not regressive taxes. They’re a fair taxbecause everyone has to pay them,” Nichols said. “By reducing thegrocery tax without a means of reimbursing the municipalities forthe lost revenue, they’re putting this on the back of the localmunicipalities.”