Jackson might need to dip into general funds to make bond paymentBy ANTHONY WARREN,
Jackson has a $9 million water bond payment due September 1, and it likely will have to dip in its general funds to cover at least a portion of the amount.
“There will be enough money to pay down the loan, but how much of it will come from the general fund? That’s the question,” said Ward One Councilman Ashby Foote, chair of the council’s budget committee.
This year, the city is expected to make around $19 million in principal and interest payments on its water bond debt.
Typically, water bonds are retired from revenues collected through the water and sewer billing department.
Despite collections improving in recent months, Foote said there will likely not be enough money in the water/sewer enterprise fund to cover the debt service.
As a result, Jackson will likely have to dip into its general fund budget to help cover costs.
Doing so could have a negative impact on the city’s credit rating, which was downgraded by Moody’s last year for the same reason.
The news comes two months after officials with the Lumumba administration said billing was collecting enough to cover the debt.
Meanwhile, the city’s bond insurers have called a special meeting with the administration to discuss Jackson’s ability to repay the debt.
That meeting, with Assured Guaranty, is slated for July 11, Foote said.
Assured was brought on in 2013 to insure the nearly $90 million in bonds issued to cover the Siemens contract work.
Jackson entered into a contract with Siemens in 2012 to completely overhaul the water system. Nearly $90 million in bonds were issued the following year to cover the contract costs.
“They’re concerned about having to exercise the insurance,” Foote said.
“The big problem is that billing is not getting to the point where everybody is getting bills,” he said. “If you’re not billing all customers, and you only get 80 percent of what you’ve billed, it’s hard to stay in business.”
Many bills are being “stranded” due to complications with the new billing software installed by Siemens. When accounts become stranded, customers no longer receive statements until problems with the account are corrected.
A private contractor has been working with the city to address problems associated with those accounts.
Earlier this year, collections for water/sewer billing had turned around. For the months of February and March, for instance, the city was bringing in around $6 million a month.
Because amounts had risen, Chief Administrative Officer Robert Blaine said Jackson likely wouldn’t have to rely on general fund dollars to cover the payments.
However, numbers dropped in April and May. For April, public works reported bringing in just over $4.2 million, or 78.8 percent of the $5.3 million billed. For May, the city collected $4.7 million of the $5.1 million charged, or around 92.4 percent, according to Public Works Director Robert Miller.
Jackson has approximately $290 million in water and sewer bond debt. Jackson will have another payment of $4 million due December 1.