August 1, 2013
board take pay cut
After receiving an audit report that included the city’s debt, the new Holly Springs Board of Aldermen voted to give back 5 percent of their salary for this year.
Harry Stevens with Watkins, Ward and Stafford presented the financial update for fiscal year 2012 Tuesday night, July 23.
Alderman Christy Owens made the motion, to help with the city’s tight budget. She also included, at Mayor Kelvin Buck’s request, that he give back $1,500 he would receive for budget preparation, in addition to the 5 percent.
Alderman Mark Miller seconded the motion.
Alderman Sharon Gipson said she needed time to think over the motion and asked to take herself out of the motion.
Mayor Buck said if a motion is made and passed by the board for the salary reduction, it would apply to all the aldermen.
Gipson clarified that she goes on record as having no problem if board members give back a portion of their salaries. Her objection was based on no prior information on the subject.
“The motion is out of order,” she said.
Alderman Bernita Fountain agreed with the cut.
“If we see we need to start to give revenue to the city, we need to start with ourselves,” she said. “I’m in favor of it.”
An amended motion, on the 5 percent salary cut for the mayor and board, passed 4-1 with Gipson voting nay.
Then separately, Owens motioned that the mayor return a $1,500 salary supplement he would get for budget preparation – the extra work load. That motion passed 4-1 with Gipson voting against it.
The 5 percent cut on the mayor’s salary will generate $4,510.32 in savings per year.
Each of the five aldermen will be taking a cut of $657.03 a year (a total savings to the city of $3,285.15 per year).
In an overview of the financial status of the city, Stevens said he completed the general city audit several months ago for the fiscal year 2012. The electric department audit up to June 30, 2012, was also completed and the water, sewer and gas audits are still in preparation.
He said the highlights he would go over were “not rosy” for up to September 30, 2012. When the audit is completed, he said he has no reason to expect a lot of difference in the final report.
The city gets a big shot in the arm in January and February each year from property tax collections and another smaller surge in September when the tax sale is completed.
“As you head toward the end of the year, you run out of money,” Stevens said.
The bottom line is that the city spent more than it brought in. The general city fund was overdrawn by $193,000 in 2012. The city overspent by $322,000 in 2012.
The economy has not been kind to municipal governments, Stevens said.
“You read about Detroit. Most cities have fiscal woes,” he said. “Sales taxes are flat. Tax equivalents from the electric department are almost maxed out, but expenditures are going up.”
Additional problems have been created by bonded indebtedness – the $3.5 million expenditure on the new police station as one example.
Stevens said it costs the city $300,000 a year to pay off the indebtedness on the police station, a debt that will not be retired until 2028.
“This is a cash flow problem for the city that comes out of the general fund,” he said.
Next, there is the four-laning on Craft Street – which has done wonders for traffic flow – but is costing the city about $85,000 a year to service a debt of $873,000 on that project.
Adding the two items together – the police station bond and the four-laning on Craft – brings the annual debt service close to $400,000. Together, these two items created a cash flow problem for the city, he said.
“Basically, we’ve spent too much,” he said.
Buck called for questions from the board.
Alderman Miller asked about fixed expenses in the budget.
“Salaries are a good 50 percent (of expenditures),” Stevens said.
City clerk Belinda McDonald clarified that the salaries and fringe benefits come to about $4 million a year and the general city has $2.5 million left to operate on.
Liddy asked if there were any other problems, other than that the city had borrowed from restricted funds.
Stevens said nothing else was done inappropriately. The city is in the process of paying back what was borrowed from those funds.
Buck asked for the overall assessment of the utility department – what the overall condition is in terms of reserves.
“Generally, overall, it is pretty good in the electric, even though the cost of power is down. Profit at the electric department was $1 million in June 2012 and $1.8 million the year before that,” Stevens said.
The increase in tax equivalency approved by TVA has helped but there is not much room to raise the tax equivalencies any further, Stevens said.
There have been collection problems at the electric department the last few years, Stevens said. And there were some security problems and inventory control problems which have been mostly alleviated by construction of a fence around the warehoused materials. He said there is quite a lot of inventory in terms of money on the yard.
Stevens reminded the board that there are plenty of good things about the city and its operations.
Buck drew the discussion to a close, saying the board has a picture of the fiscal situation in the city, but there is no time for detail.
“Why it is so important is because in the next couple of weeks, we will be in the middle of the budget process,” said Buck. “It is important for employees and departments to know there won't be a lot of money to deal with. We are dealing with a financial challenge.
“We simply cannot spend what we don’t have. You can’t do if you don’t have the money. We have maxed out one of our ways (of getting revenue via tax equivalencies).”
Buck said the city obtains revenue from three main sources – the tax equivalency that generates about one-third of the general city budget, the sales tax and the property tax.
“The challenge is to provide services with what we have or come up with other revenues,” he said. “Here we are at the beginning of the term. The question is, what wiggle room do we have in the budget? I would like for us to have a more robust reserve. The $200,000 the auditor mentioned is generous – not cash money in some of these (restricted) funds.
“Debt service is not something you can delay. We’ve got to repay that. This is a good public approach to share this information with the residents. It is important to help them to understand the decisions that may be made by this board.”
Buck asked the city clerk if she had anything to add to the discussion.
“We have $2 million left to operate on annually,” McDonald said.
Owens asked Stevens about the $10 million school bond issue for a new intermediate school.
He said he knew about the school bond but does not think it will have any impact on the city at all.
“The school is responsible for paying that bill,” he said.
News: (662) 252-4261 or email@example.com
Fax: (662) 252-3388
Questions, comments, corrections: firstname.lastname@example.org
The South Reporter
P.O. Box 278
Holly Springs, MS 38635
©2004, The South Reporter, All Rights Reserved.
No part of this site may be reproduced in any way without permission.
The South Reporter is a member of the Mississippi Press Association.
Site managed and maintained by
South Reporter webmasters Linda Jones, Kristian Jones
Web Site Design - The South Reporter
Back | Top of Page