Batesville city officials approach next Tuesday’s budget hearing with no ad valorem tax increase for the 2017 fiscal year, the 13th consecutive year for no millage increase on city residents’ real and personal property.
The money to make up the difference between the city’s revenue — ad valorem tax revenue, sales tax revenue the city receives back from the state collected from retail sales in the city, tourism tax revenue and other income sources — and the city’s expenses comes from a surplus in the gas department.
When asked if the city had enough money in its budget to fund raises and several purchases and projects where postponement for another year could be an option, CPA Bill Crawford replied: “You’ve got enough money in gas. Until the board raises taxes, that’s kind of the way it’s going to be.”
“This is not something new, either,” Alderman Bill Dugger said last week during what will likely be the city board’s last meeting before the September 6 public hearing.
The city has relied the municipally-owned utility’s excess revenue since shortly after World War II when the late Mayor Dan L. Ferguson created a city gas department to tap in to the newly-constructed natural gas pumping station on Highway 6 West.
“It’s new that we had a shortfall; we had a warm winter,” Mayor Jerry Autrey. “If we had another warm winter and another warm winter we’re going to have to do something about taxes one day.”
The mayor and aldermen have had some version of the same conversation during prior budget seasons. Assistant City Attorney Colmon Mitchell said that both the Public Service Commission and the Department of Audit frown on transferring excess proceeds from one department to fund another.
The regulatory agencies take the view that if a utility generates excess revenue, utility rates should be lowered, according to Mitchell. If lowering utility rates creates a shortfall in funding other departments or the city’s general fund, ad valorem taxes or other rates should be increased to make up the difference. However, the Mississippi Attorney General has ruled the transfers legal, giving the city leeway in its budgeting.
With their ability to transfer excess gas department revenue, the mayor and aldermen can take a more nuanced approach to funding city government.
Revenue from gas consumers allows the city to reduce its tax burden on property owners. Gas department proceeds also help lower the cost of water and sewer service to city customers.
While the present board of mayor and aldermen has worked over several years to gradually increase the price of water and sewer service in an effort to raise that department’s revenue sufficiently to offset its cost of operation, $1 million will be transferred from the gas department during fiscal 2017 to balance the water and sewer budget.
The final decisions that brought to fruition the budget published today on page A8 included removing and postponing some projects to reduce expenses to lessen the amount needing to be transferred from gas. The transfer for 2017 is $2,431,000.
City officials are hoping for a cold winter.