Barbour signs modular tax cut to help Katrina rebuilding
Published 4:54 pm Friday, October 6, 2006
Mississippi Gov. Haley Barbour on Thursday signed a new state law reducing the sales-tax rate on modular houses, a measure designed to speed up Gulf Coast redevelopment more than 13 months after Hurricane Katrina destroyed thousands of homes.
The law took effect immediately, cutting the modular tax rate from 7 percent to 3 percent. Barbour said it could shave $4,000 to $6,000 off the price of a modular house.
“This will significantly help the reconstruction efforts of many thousands of our neighbors in south Mississippi,” Barbour said.
The homes are made in factories, shipped in large pieces and erected on slabs. Manufacturers say modulars look like traditional homes to the untrained eye, and can go up in a matter of days if local building crews are available. Some coast residents now face waiting lists of three to four years for a traditionally built home in the high-demand coast market, said Senate Finance Chairman Tommy Robertson, R-Moss Point.
The tax cut zipped through the Legislature Thursday afternoon in a special session that lasted only an hour and 45 minutes; it was the only item on the agenda for the second special session of the year.
“It’s the fastest special session in the history of the Mississippi Legislature,” said Senate Appropriations Chairman Jack Gordon, D-Okolona, who’s been in office three decades.
The Senate passed the plan 46-0, and the House passed it 114-1. Rep. Earle Banks, D-Jackson, cast the only “no” vote.
Robertson said modular homes can be built for $80 to $100 a square foot, compared to $130 to $140 a square foot for traditionally built homes. He also said the waiting time to get a modular home is only a matter of weeks now.
“This is an affordable way to get people into housing,” Robertson said.
Chad Knight, president of Knight Properties Inc., said Thursday that his Jackson-based company plans to put up more than 300 modular homes near Interstate 10 in Gulfport and Biloxi in the coming year. He said some will be single-family homes and some will be groups of townhouses.
Knight said the lower tax rate will help make the homes more affordable.
“It’s certainly going to be a big help to people down on the coast who are hoping to get into homes,” Knight said in an interview at the Capitol.
He said his developments will have modular homes from 1,000 to 2,000 square feet, costing roughly $100,000 to $200,000.
Because modulars are made to meet local building codes, they’re often allowed to be put in places where mobile homes are excluded from permanent placement.
This was the second time Barbour brought up the modular tax cut for legislative debate. During a special session five weeks ago, the Senate approved the cut, but the proposal died then when House Ways and Means Committee Chairman Percy Watson, D-Hattiesburg, didn’t bring it up for a vote, saying he had too little information about the impact.
On Thursday, Watson said his committee needed the time between sessions to study the plan.
“What we have before us is, I feel, tax equity,” Watson told the House on Thursday.
Mobile homes already are taxed at 3 percent in Mississippi. In traditionally built homes, the builder pays a 7 percent tax on stoves, toilets and other materials, and the services of some contractors are taxed.
Some House Democratic leaders, including Speaker Billy McCoy, said they wanted proof that consumers, and not just modular home makers, would see some benefit from the tax cut.
State Tax Commission officials said about 40 modular homes were sold in Mississippi in 2004, about 70 in 2005 and about 150 in the first six months of this year.
The leaders of the Home Builders Association of Mississippi and the Mississippi Manufactured Housing Association both said they supported setting a 3 percent tax on modular homes.
Only a governor can call a special session and he controls the agenda. The session in late August had several items on the agenda and lasted three days.
Several House members had said they wanted Barbour to expand the agenda Thursday to allow consideration of a plan to establish state-funded grants to help people rebuild their Katrina-damaged homes.
The Mississippi Development Authority already is overseeing a federally funded homeowners’ grant program, and Barbour has said the state should not create more debt to pay for something the federal government already is providing.
During debate on the modular tax cut, some House Democrats said they’ve been bombarded with complaints about the slow pace of distributing the homeowners grants — a program, they pointed out, with rules set by an agency overseen by the Republican governor.
“I am 300 miles from the Gulf Coast in my district, and I can’t even work my day job for the phone calls I’m getting,” said Rep. Steve Holland, D-Plantersville, “I don’t know what to tell the poor souls when they call.”
The bill is Senate Bill 2001.