Council OKs budget but not water rate increase

By By Fredie Carmichael / staff writer
Sept. 21, 2002
The Meridian City Council rejected the city administration's last-ditch budget proposal Friday, funding city government for the next fiscal year without increasing water rates.
The administration says the move will leave Meridian about $800,000 short money needed to pay debts, hire employees and purchase new vehicles and equipment.
The city's attorney and chief financial officer said the approved budget could also mean legal troubles in the future.
Councilmen approved the $86 million budget by a vote of 3-2. Ward 3 Councilman Barbara Henson, Ward 4 Councilman Jesse Palmer Sr. and Ward 5 Councilman Bobby Smith voted to approve the budget.
Councilmen Smith and Palmer said after the meeting that they could not vote for a budget with a 10 percent water rate increase because they have been flooded with phone calls from constituents this week.
Palmer agreed.
City attempts
compromise
The problems began earlier this month when the mayor proposed raising water rates nearly 30 percent over the next three years including a 10 percent increase beginning Oct. 1.
Councilmen decided Tuesday in a work session that they wanted to approve the proposed budget, but said they discovered during that meeting that the proposed budget included the water rate increase.
The council then decided to delay a vote on the budget until Friday.
Before Friday's vote, city leaders presented a second proposal in which the water rates would only be raised for residents who use more than 2,000 gallons each month.
Their proposal also included dropping the rate increase from 10 percent to 8 percent, and using $600,000 from the water fund instead of the originally proposed $800,000 for the general fund.
The city's proposals were ignored.
Henson said the council was boxed in.
There will be
a price to pay'
Bill Hammack, the city's attorney, and Ed Skipper, the city's chief financial officer, said approving the budget without the 10 percent rate increase will put the city in violation of a bond code.
The code states that the city "annually establish rates, charges and fees sufficient to generate net revenues in each fiscal year not less than 110 percent of the aggregate of all debt service payments and fund allocations required under the various bond documents."
Without the rate increase, Skipper said, the city will no longer be in compliance with that code.
Hammock agreed.
Sept. 30 deadline
Some councilmen, though, did not agree.
Both Smith and Henson said they did not believe they violated any code in passing the budget without the increases.
City leaders said they now must go back and restructure the budget with $790,000 less in revenues. Skipper said the council's action will drop the proposed revenue in the water fund from $9,345,000 to $8,555,000.
The city must have a budget in place by Sept. 30.