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Water and sewer rates going up in Jackson; trash rate hike voted down

Jackson city council
Jackson city council(WLBT)
Published: Dec. 14, 2021 at 1:02 PM CST
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JACKSON, Miss. (WLBT) - Jackson residents are about to see their water and sewer rates go up.

After more than an hour and a half of discussion, the Jackson City Council narrowly approved raising its water and sewer rates for customers.

However, the council voted down a proposal to raise sanitation fees to $35 a month.

Jackson leaders say the increases were needed to meet consent decree requirements, bring the city into compliance with its bond covenants and cover current operating costs within its solid waste division.

Council members voted 4-3 to approve a 20 percent rate hike for water and sewer, with Virgi Lindsay, Angelique Lee, Ashby Foote, and Brian Grizzell voting in favor. Opposed were Councilmen Kenneth Stokes, Aaron Banks, and Vernon Hartley.

With the rate increases, sewer fees will go from $4.47 per hundred cubic feet (CCF) to $5.36 per CCF. Water will go from $3.21 to $3.81 per CCF.

One hundred cubic feet of water is 748 gallons. The average family of four uses between 320 and 400 gallons of water a day, or between 12.8 and 16 CCFs per month, according to data provided by the United States Geological Survey.

Foote, who represents Ward 1, broke ranks with Lee, Lindsay, and Grizzell to be the deciding vote in the council’s decision to reject the garbage rate increase.

He, along with Ward 5 Councilman Hartley, said the city should pump its brakes on the sanitation increase, pointing to the fact that Jackson is currently in talks to bring on a new garbage contractor.

“You’ve asked us to vote on something here we don’t have all the data on, and we don’t know what’s going to happen with garbage three months from now,” Foote said.

Likewise, Hartley said the city should hold off on raising garbage rates now because it might have to raise rates again to cover the new contract costs.

“Why are we rushing this thing, when we have an RFP out there?” he asked. “Can we not wait?”

He also said Jackson should wait to see if collections improve within the billing department. Water Sewer Business Administration recently put in place new billing software, including a new program for making online payments.

At the same time, the city also recently lifted its moratorium on water shut-offs, which was put in place during the height of the COVID-19 pandemic.

So far this year, water collections have improved. Numbers showed that Jackson collected approximately $5.7 million in water/sewer fees in October and $6.9 million for November, according to Director of Administration Laa Wanda Horton.

Mayor Chokwe Antar Lumumba said he understood council members’ concerns but said the city needed to increase its garbage rates to keep solid waste from running out of money.

“At the present rate, for our garbage collection, we have been operating at a deficit,” he said. “If we don’t change this rate, then what we may run into by the end of the year, we may not be able to pay our bill for sanitation.”

Sanitation fees cover residential trash pickup and disposal. Currently, residents pay $20.84 a month for that service, an amount that has not changed in more than a decade.

Meanwhile, Jackson’s sanitation division has been hemorrhaging money for years, in part, due to rising costs and decreased collections due to problems in the billing department.

In 2016, solid waste operated at a $390,000 deficit. In 2020, that deficit had increased to around $1.3 million, said Chief Financial Officer Fidelis Malembeka.

The administration has been sounding the alarm for weeks. At a town hall in November, for instance, City Attorney Catoria Martin said solid waste was expected to run out of money by the spring.

Martin pointed to the fact that the city wasn’t prepared for the rate increases associated with its emergency garbage pickup contract.

The city entered into that agreement in late September, after talks to bring on a long-term trash collector fell through.

“The problem is we didn’t really have a chance to go in and run the numbers on that contract ahead of time,” she said at the time. “We ran into an emergency situation where we just had to get a contract in place. What that means is the contract we signed is going to make us run out of money in the solid waste division within six months.”

The contract cost Jackson $568,856 for its first month and increased to around $808,000 for each month after that.

On Tuesday, Martin told the council that the increase brought to them would still not cover the costs of the emergency waste contract and that an additional increase would likely be on the horizon with the city’s next garbage contract.

She said the $35 fee also was based on the city going to a once-a-week pickup, as opposed to the current twice-a-day service.

“There will be another increase later, regardless if it’s once-a-week or twice-a-week,” she said.

Jackson is currently evaluating responses to the city’s latest request for proposals for residential trash pickup. The administration is expected to take the highest-scoring proposal to the council in January.

While solid waste is operating at a deficit, Jackson’s water and sewer hikes were needed to bring the city into compliance with its sewer consent decree and its water/sewer bond covenants.

Jackson entered into a sewer consent decree with EPA and the U.S. Department of Justice in 2013. Under terms of the decree, Jackson will have to spend around $960 million to bring its sewer system into compliance with federal water quality law.

The city is currently in talks to renegotiate decree terms. As part of its modified decree, the city had to submit a financial model on how to pay for decree work. Under that model, Jackson would raise water and sewer rates 20 percent this year and 17 percent at the start of the next fiscal year.

Consent decree aside, Jackson also has to set aside 1.2 months of operating expenses in a reserve account each month to cover water bond debt covenants. Being out of compliance could cost Jackson money down the road in terms of lower credit ratings and higher bond interest rates.

Jackson has approximately $198 million in outstanding water and sewer debt, said Ricardo Callendar, a senior managing consultant with PFM, the city’s financial advisor.

The mayor previously said a portion of its Siemens settlement funds were set aside to bring the city into compliance with its bond rules. It was unclear what happened to that money.

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