Funding Talks

By ANTHONY WARREN,

Officials explore financial options for infrastructure needs

Talks continue on how Jackson plans to fund its current and future infrastructure needs.

The capital city has billions of dollars in road, water, sewer and drainage problems, and leaders are grappling with how to address them.

Mayor Chokwe Antar Lumumba said at a recent budget committee meeting that the most likely scenario will include taking on long-term debt and using one-percent dollars and other revenues as leverage for it.

“It’s not a question about whether we can leverage, but what leveraging strategy we can employ to the best benefit of the city,” he told the city council.

“Obviously there are differing opinions on what the amount (should be) … We can speak to that. We can figure out what the sweet spot is.”

Lumumba and council members discussed leverage at a meeting in late October.

The mayor said the administration had not come up with a plan at press time, and would be looking at a number of factors before making a decision.

Among factors, the administration wants a clearer picture of its infrastructure needs, as well as the impact an overhaul of the water billing system will have on water collections.

For the most part, council members appear to be on board with issuing bonds. However, members differ on how much should be borrowed and how the funds should be paid back.

Ward One Councilman Ashby Foote believes leveraging can be a “useful tool … but it’s important to articulate how we will pay the leverage down.”

Ward Two Councilman Melvin Priester and Ward Four Councilman De’Keither Stamps support using one-percent dollars to leverage debt.

Stamps doesn’t want to use more than a third of the one-percent dollars the city is expected to collect over the tax’s lifetime.

The city implemented the one-percent tax in 2014. The assessment is expected to generate between $240 million and $300 million over its 20-year lifespan.

To date, about $55 million has been collected, of which about $16 million is unobligated.

“Ten years from now, someone’s going to be sitting here (on the council and will) want to do some work,” he said.

Priester had questions about how the debt would be repaid, and told the mayor he would not support borrowing more than $100 million.

“One frame of thinking is you leverage (all of the one-percent money). One frame is you don’t. There’s something to be said on both approaches,” Lumumba said. “One would leave you with funds for continuing maintenance. But we’re not really to the place where any of our roads are in the condition to be maintained.”

 

Lumumba said the city will have a clearer picture of its needs once its comprehensive infrastructure plan is completed.

The plan will include, road, water, sewer and other needs, and will give an estimate on what Jackson will need to address them.

Chief Administrative Officer Robert Blaine said officials were doing a “gap analysis” to review information that is currently available and what is lacking.

Roads alone are expected to cost the city $2 billion over the next decade, while at least $1 billion will be needed for water and sewer, according to previous reports.

 

Funding sources for the city include the one-percent infrastructure tax, water and sewer usage fees and the “capitol complex improvement district,” or CCID.

The infrastructure tax is assessed on most commercial transactions in the city limits, excluding groceries and medicine. Funds collected go into a special account and can only be used for infrastructure improvements. Any expenditures must be spent in compliance with a master plan approved by the one-percent oversight commission.

Commissioners are on board with the idea of leveraging funds, Lumumba said.

Water and sewer fees come from collections on monthly water and sewer bills. Those dollars are collected and put in a special enterprise account, for use specifically on water and sewer needs.

This year, the city is expecting to bring in around $72 million in water and sewer usage fees, according to the 2018 budget.

Historically, billing only brings in about 80 percent of its total collections. In fiscal year 2017, the city projected $72.3 million in revenues, but only brought in $57.9 million.

So far this year, Jackson is still not collecting between $1.5 million and $2 million a month, according to Blaine.

However, a major overhaul of the water billing department is under way to improve collections and improve billing accuracy for customers.

Another revenue stream for the city is the CCID, or the “capitol complex improvement district.” However, funds for the district will not start coming in until 2018, and even once dollars are available, the city will not have direct access to them.

During the 2017 legislative session, lawmakers created the CCID, which takes in a large swath of Jackson and sets up a mechanism to fund infrastructure improvements within it.

The law does not allocate the money to the capital city, but rather gives the Mississippi Department of Finance and Administration the authority to spend the money, with the input of a special advisory board.

Next fall, the state will allocate about $3 million for improvements in the district, followed by $7 million the next year and $11 million each year after that in perpetuity.

 

 

 

 

 

 

 

 

 

 

 

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