Jackson officials: No electric increase despite slumping sales tax revenue

Jackson officials ruled out another electric rate increase as they addressed questions about declining sales tax revenue and other aspects of the city's 2009 budget.

"We will not raise utility rates to balance a budget," said city administrator Jim Roach. If sales tax revenue continues to decrease, "we'll have to think about cutting back on services."

Jackson electric customers were hit with an increase totaling about 40 percent, phased in over nine months from late 2006 through mid-2007. Roach said that increase was to offset higher costs the city pays for electricity, not to increase revenue.

Sale of electricity is a major source of revenue for Jackson and is projected to account for 57 percent of the city's 2009 income. That number is deceiving, said Roach. Costs to produce and deliver the power gobble up about 90 percent of the money, leaving 10 percent to go toward other programs and services.

Sales tax revenue declined in 2008 for the first time in 16 years. After an average annual increase of 5.7 percent over that period, last year's sales tax revenue was down 3.72 percent from the previous year, according to figures provided by city clerk Mary Lowry. Sales taxes account for 13 percent of 2009 revenue projections.

Planned spending for 2009 totals $30.07 million, said assistant city administrator Larry Koenig. The board of aldermen approved that number at its Dec. 15 meeting.

The city is expected to bring $27 million into its coffers this year, Koenig said. That is just over $3 million less than planned spending. The difference, he said, will come from money left over from previous years.

"We certainly hope that we never run into a situation where we spend every dollar that we take in as revenue for the year," Koenig said. "If balances are carried forward and spent in the following year, they very definitely appear as a planned expenditure in the current year's spending plan."

Carryovers are shown as funds available for authorized expenditures, not as new revenue, he said.

Some city funds are restricted as to their use, Koenig said, citing the Series 2000 construction fund, which is earmarked for a new electric feeder line on the east side of Jackson. The 2008 budget projected that all $1.16 million of that fund would be spent, but for various reasons $980,000 of that fund is still unspent and carries over into the 2009 budget as a spending projection, but not as new revenue. The water and sewer construction fund, with $1.08 million carried over from previous years, is also restricted money, Koenig said.

The city's electric surplus fund has a current balance of about $7 million, but half of that is maintained for system upgrades, such as replacing lines, poles, transformers and other maintenance, Roach said.

Water and sewer funds make up another 11 percent of Jackson's budget, but revenue from those programs is designed to break even with operating costs, Roach said.

The city actually spent $32.8 million last year, about $1 million over budget. Unplanned spending for February's ice storm accounted for the difference, Koenig said. Even though the city was reimbursed by federal and state emergency management agencies for most of the tab, it still counts as expenditure.

Roach said projecting revenue is an inexact science, but city officials try to be conservative in their estimates.

"We historically try to project expenses a little higher and revenue a little lower," Roach said. "We take the previous year's figures into account, and we also look at historical trends."