For the second year in a row, Hattiesburg City Council members have approved a balanced annual budget with an allocation of $155.29 million, down from Fiscal Year 2021’s budget of $180 million.
The budget, which was proposed during a Sept. 7 council meeting by interim chief financial officer Connie Everett, was accepted at the Sept. 14 council meeting. It includes $56.06 million for the general fund, $35.9 million for capital projects, $5.24 million in debt service and $57.55 million for water and sewer.
“We’re obviously continuing the city’s approach to infrastructure; it goes in and continues to take steps for city employees,” Mayor Toby Barker said. “It leaves us with a structurally balanced general fund budget, and we continue to make progress on strengthening the city’s financial position.
“You look at the overall $155 million budget, that includes bond proceeds and grants. A lot of the money has been spent because of the (upcoming) Public Safety Complex, but that’s not a recurring expense. Our recurring general fund expenditures did go up some, quite frankly because our sales tax revenue estimate went up as well.”
Special items of note in the budget include:
- Additional jobs: an innovative programs coordinator in the Parks and Recreation Department, a code enforcement officer in the Urban Development Department, an electrician and HVAC professional in the Public Works Department and two equipment operators in the Parks and Recreation Department.
- An increase in the entire Water and Sewer Department payroll, with a minimum wage of $15 per hour.
- Increases in salary for police officers and dispatchers.
- The allowance of annual step-raises for firefighters.
- The allowance of “years of service” raises for employees of at least two years in the public works and parks and recreation departments.
- The increase of salaries of code enforcement officers and directors.
The budget does not include any ad valorem – or property tax – increase, as the total tax levy will remain at the Fiscal Year 2021 rate of 119.21 mills. The mills are divided between the city at 53.13 mills and the Hattiesburg Public School District at 66.08 mills.
While the tax levy is not increasing, Forrest County was selected for property value assessment for FY 2021, so increased or decreased property values could affect residents’ property taxes in FY 2022. Residents are encouraged to contact the tax assessor’s office for any questions or to file a valuation protest.
“We set a very conservative estimate for FY 2021 because of the (COVID-19) pandemic,” Barker said. “We didn’t know how it was going to go, but we’ll end up collecting – we’ll find that out (in the near future) more than we ever have in the history of our city.
“So that gave us the room to increase that estimate for FY 2022, while still being conservative and understanding that we’re probably not going to collect the same amount next year. That’s very unlikely, and so given the amount of new revenue that we had to spend, we were able to take steps for our city employees, and we hope to continue building on that going forward.”
Barker also included a significant capital improvement project to the city’s water and sewage infrastructure. The plan is in response to a consent agreement reached in August 2020 with the U.S. Department of Justice and the Environmental Protection Agency that obligated the city to reduce sanitary sewer overflow and improve overall operations of Hattiesburg’s sewer system.
The agreement set out a 16-year plan, and it is estimated to cost between $40 million and $50 million to bring the system into compliance. Highlights of the plan include:
- Eliminating undersized water lines;
- Improving and modernizing water treatment plants;
- Implementing management, operation and maintenance programs;
- Eliminating sanitary sewage overflows;
- Regular sewer system maintenance and improvement; and
- Increasing fire protection capacity to reach a Class 2 fire rating.
That plan will cost $8.25 million per year - $2.5 million for capital improvements to the water system, $5.25 million for sewer system operations, maintenance, rehabilitation and $500,000 for increased fire protection.
Barker has proposed covering the expenses in two ways. That entails transferring the savings from debt reduction in 2022, 2023 and 2024 to this program.
In addition, Barker proposed covering the rest with a three-year incremental rate increase for water and sewer.
In 2022, the rate would increase by $1.48, in 2023 by $1.60 and in 2024 by $1.73. This incremental rate increase would put the minimum bill at $46.66 for Fiscal Year 2044 budget. The last rate increase for water and sewer was in 2019.
“Obviously, this consent decree has put a lot of pressure on what the city is going to have to invest, not only programmatically, but also in replacing this infrastructure,” Barker said. “For those two priority areas, we have to get to the point where we’re spending $3 million or $3.5 million annually to make that deadline of hopefully ending (sanitary sewer overflows) in that 15- or 16-year window.
“We also have to understand that there’s a whole lot of our city that is outside those priority areas, and we don’t want to end up in the same shape as those in the priority areas. So before a federal agency comes and makes us act, we want to get that ball rolling to begin that investment in that replacement as well. Add to that our continued focus on water infrastructure – replacing old and undersized lines – as well as strengthening the firefighting capacity of our city.”
Barker said while nobody wants to pay extra fees, once the incremental increases go into effect by the end of the fall of 2023, the city will have paid off a large amount of debt in a year or two after that.
“That will then give us more capacity to invest,” he said. “So it’s very likely this will be the only set of increases that we see for a very long time, if things go well.
“We try to project as much as we can, in terms of what inflation will do and what the cost of things will do, but I think this will be a responsible move that will put us proactively ahead in dealing with the consent decree and the overall quality and sustainability of our water system.”