AN ACT TO AMEND SECTION 27-31-104, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT FOR ANY PROJECT WITH A CAPITAL INVESTMENT IN EXCESS OF $1,000,000,000.00 FOR WHICH A FEE-IN-LIEU OF AD VALOREM TAX AGREEMENT IS ENTERED INTO AFTER JULY 1, 2026, A PORTION OF THE SUM ALLOWED AS A FEE-IN-LIEU ON THE PORTION OF THE PROJECT IN EXCESS OF $1,000,000,000.00 SHALL BE DEPOSITED INTO THE MISSISSIPPI STRATEGIC DEVELOPMENT FUND CREATED IN THIS ACT; TO EXTEND THE DATE OF THE REVERTER ON THE SECTION OF LAW; TO CREATE THE "MISSISSIPPI STRATEGIC DEVELOPMENT FUND" AS A SPECIAL FUND IN THE STATE TREASURY; TO PROVIDE THAT MONIES IN THE FUND SHALL BE EXPENDED BY THE MISSISSIPPI DEVELOPMENT AUTHORITY, UPON APPROPRIATION BY THE LEGISLATURE, TO PROVIDE ASSISTANCE RELATED TO PROJECTS IN MISSISSIPPI FOR MAKING STRATEGIC INFRASTRUCTURE INVESTMENTS, FURTHERING ECONOMIC DEVELOPMENT AND MAKING QUALITY OF LIFE IMPROVEMENTS STATEWIDE; TO BRING FORWARD SECTION 27-31-105, MISSISSIPPI CODE OF 1972, WHICH AUTHORIZES COUNTY BOARDS OF SUPERVISORS AND MUNICIPAL AUTHORITIES TO GRANT A FEE-IN-LIEU OF AD VALOREM TAXES FOR EXPANSIONS OF FACILITIES OR PROPERTIES, FOR THE PURPOSES OF POSSIBLE AMENDMENT; AND FOR RELATED PURPOSES.
HB 1635 revises Mississippi’s fee-in-lieu of ad valorem tax law for large economic development projects. It keeps existing local authority for counties and municipalities to negotiate fee-in-lieu agreements for qualifying new enterprises, private companies, qualified businesses, existing enterprises, and certain disaster-area projects, while continuing the prohibition on fee-in-lieu agreements for medical cannabis establishments. The bill also carries forward the separate rules for expansions and equipment replacements under Section 27-31-105.
The main policy change is a new revenue-sharing rule for very large projects. For projects with more than $1 billion in capital investment, 80% of the fee-in-lieu amount attributable to the portion of the project above $1 billion would be deposited into a new Mississippi Strategic Development Fund, while 20% would still go to the county or municipality and school districts. The bill also extends the operative date of Section 27-31-104 through June 30, 2029, and makes the new distribution rule apply to agreements entered into after July 1, 2026, as well as certain earlier agreements that had not yet placed taxable property on the rolls by January 1, 2026.
HB 1635 creates the Mississippi Strategic Development Fund in the State Treasury. Money in the fund would not lapse to the General Fund and could be spent only by the Mississippi Development Authority, with legislative appropriation, for strategic infrastructure investments, economic development, and statewide quality-of-life improvements. In effect, the bill redirects part of the tax-equivalent payments from the largest incentive deals into a state-level pool intended to support broader development priorities.
The bill’s general sentiment appears to be pro-development and fiscally strategic, based on its structure and purpose, but there is no recorded committee debate or vote history in the provided materials. The measure seems designed to preserve local incentive tools while capturing a share of the benefits from exceptionally large projects for statewide use. Because no transcripts or votes are available, there is no documented public support or opposition in the record provided.
The most likely point of contention is the redistribution of revenue from local governments and school districts to the new state fund for billion-dollar projects. Local officials and school districts may view the change as reducing their share of incentive-related revenue, while supporters may argue that the state should share in the benefits of mega-projects and use the money for infrastructure and statewide economic development. Another possible issue is the bill’s retroactive application to certain pre-July 2026 agreements that have not yet reached the tax roll, which could affect projects already in the pipeline.
HB 1635 amends Section 27-31-104 of the Mississippi Code and brings forward Section 27-31-105 for possible amendment, while also creating a new special fund in the State Treasury. The bill changes how fee-in-lieu of ad valorem tax payments are distributed for projects over $1 billion in capital investment, directing 80% of the fee attributable to the portion above that threshold into the Mississippi Strategic Development Fund and leaving 20% for local governments and school districts. It also extends the sunset/reverter date for the fee-in-lieu statute to June 30, 2029, and preserves existing rules for qualifying expansions and equipment replacements under Section 27-31-105. The bill affects counties, municipalities, school districts, the Mississippi Development Authority, and large private or quasi-public development projects that negotiate fee-in-lieu agreements.
The overall sentiment reflected by the bill is supportive of economic development and infrastructure investment. The measure is structured to preserve Mississippi’s existing incentive framework while adding a state-level benefit from the largest projects, suggesting a policy preference for using major development deals to fund broader statewide priorities. Because there are no committee transcripts or recorded votes in the provided material, there is no direct evidence of partisan or stakeholder reaction, but the bill’s design indicates an intent to balance local incentives with statewide revenue capture.
The main likely point of contention is the shift of a large share of fee-in-lieu revenue from local jurisdictions to the Mississippi Strategic Development Fund for projects over $1 billion. Counties, municipalities, and school districts may object to losing revenue that would otherwise support local services and schools, while supporters may argue that mega-projects justify a statewide return. A second possible concern is the bill’s treatment of certain preexisting agreements that are not yet on the tax roll, which could be seen as affecting projects already negotiated. The bill also continues to exclude medical cannabis establishments from fee-in-lieu eligibility, but no discussion record is available showing whether that exclusion was debated.