‘It’s really embarrassing’: Contractors worked for Jackson for a year without getting paid

JACKSON, Miss. (WLBT) - After not setting aside funds as part of its 2022 budget, the city of Jackson is just now paying for consent decree program management services for the current fiscal year.

Tuesday, the city council approved paying Waggoner Engineering and AJA Consultants $1.7 million for program management services “rendered and invoiced” through July 2022.

Program management is required under the terms of Jackson’s sewer consent decree with the Environmental Protection Agency. However, officials told the council that no funds for the work were set aside as part of the 2022 budget.

The 2022 fiscal year ends at midnight Friday. The 2022-23 budget year begins on October 1 and goes through September 30, 2023.

“So, they’ve been working for this fiscal year that’s getting ready to close out here in about three days and they haven’t been paid for any of the work for this past year?” Council President Ashby Foote asked. “I don’t think that’s a very healthy relationship for our contractors.”

The council discussed the issue despite Chief of Staff Safiya Omari saying that Tuesday’s special meeting was not the place to do it. “I’m just not going to say anything to this. There are some discussions that could be had, but they should not be... held in this forum,” she said. “So let’s just move on.”

Foote asked after the meeting if it shouldn’t be discussed at the council, then where? “It’s imperative that we get organized in the manner that we can hire and that we can pay [contractors] after they’ve done the work,” he said. “It’s really embarrassing... to have to come up with this money now, for work that they’ve been working on for a full year.”

Waggoner and AJA were brought on, in part, to help Jackson achieve compliance with its sewer consent decree. Jackson entered into the decree with the U.S. Department of Justice and EPA in 2012 to bring its sewer system into compliance with federal water quality laws.

Ward 5 Councilman Vernon Hartley asked if there were any mechanisms to ensure companies are paid in a timely fashion in the future.

“We’ve had a number of changes in public works and we’re improving our processes to make sure this doesn’t happen again,” acting City Engineer Robert Lee said. “We’re here to clean it up and we’ve got it budgeted for ‘23 going forward.”

Jackson’s Public Works Department has gone through several staffing changes in recent months, with the public works director resigning from the city after being demoted and the longtime city engineer retiring after 20 years of service.

Deputy City Attorney Terry Williamson said the funds were not set aside in the budget because the city didn’t have them. “We’ve now been able to locate, at the end of the fiscal year, the money for that. My understanding is that there is money budgeted for next year for this purpose,” Williamson said. “It’s not like it’s an oversight in paying the invoices. It’s having the available funding to pay.”

He said the city has had similar concerns with Burns and McDonnell and Kilpatrick, Townsend and Stockton, two other firms involved with the consent decree work, who provided services this year, despite funds being set aside to cover the expenses. The council approved paying Susan Richardson, an attorney with Kilpatrick, earlier this month.

Typically, consent decree work would be funded with revenues generated through the city’s water/sewer enterprise fund. However, that fund has been depleted due to a number of factors, including complications with its billing system to city spending based on overinflated revenue projections.

Public Works officials did not tell the council where the funding to pay Waggoner/AJA was found. “It’s funded,” Lee said.

Chief Financial Officer Fidelis Malembecka told WLBT Tuesday afternoon that the money was paid for with other savings in the budget. He said one reason the items were not budgeted is that the city did not envision some of the contracts extending into the fiscal year.

Jackson has been working with Kilpatrick attorneys for years to renegotiate the terms of the sewer consent decree. Those negotiations are ongoing.

“My understanding is Public Works has consistently requested that money be budgeted for this, and that money was not available within the revenue budget that was projected,” Williamson said, referring to the Waggoner/AJA contract.

Ward 6 Councilman Aaron Banks said he wanted to know where the money was found, and how it would impact the city’s budget going into the next fiscal year. He also was concerned whether the money taken to pay the contractor was moved from the city’s reserve fund, which it must maintain to stay in compliance with its water and sewer bond covenants.

“I think that’s something that the council needs to be abreast of,” he said. “We need to get the information on that on a consistent basis because we are taking such votes without having a completed CAFR by an auditor.”

The city has yet to release its Comprehensive Annual Financial Report for the fiscal year 2021. Audited financials typically come out in late spring or summer of the following year. The 2019 CAFR, for instance, was released in August 2020. The 2018 audit was put out in July 2019, according to city documents. However, the 2020 CAFR was not completed until February 2022 and the 2021 audit has not been released.

“Our contracts, our contractural process... It demands that there’s trust. So, when we step up and we sign off on things, and we tell someone to go to work, we need to make sure the money is there,” Hartley said. “If we do not have the trust of these contractors, they’ll go some other place. And we need to make sure that they’re comfortable in our processes so that they can feel assured to go work.”

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