Melton Pulls $3 Million From City’s Reserves

by Adam Lynch
September 28, 2007

The administration of Jackson Mayor Frank Melton got its wish from the council in a 3-to-2 vote in favor of raiding $3 million from the city’s $7 million budget reserve fund to fix a lingering hole in the 2007 budget. “I don’t like the idea of taking money out of the fund, but I don’t see any other way to deal with (the shortfall)," Ward 3 Councilman Kenneth Stokes said.

The council had authorized a $5.3 million short-term debt re-financing plan and cut some city positions to counter a roughly $4 million shortfall in the incoming 2008 budget, before the Sept. 15 deadline—but then had to deal with a remaining $3 million shortfall leftover from the 2007 budget. With three days before the Sept. 30 deadline, the council had few options beyond the reserve raid.

Ward 6 Councilman Marshand Crisler and Ward 2 Councilman Leslie McLemore were attending an out-of-town National League of Cities conference, leaving only Ward 1 Councilman Jeff Weill and Ward 7 Councilwoman Margaret Barrett-Simon to oppose the raid with Stokes, Ward 4 Councilman Frank Bluntson and Ward 5’s Charles Tillman voting for it.

Weill argued that raiding the reserve would hurt the city’s interest rates on future bond projects, and negatively affect the city’s standing with financing agencies.

“I still oppose dipping into the reserve fund,” Weill said. “I just don’t think that’s sound business practice.”

Stokes said the council would not have been faced with tapping the reserves had it voted in favor of an $8 million long-term debt refinancing plan in August, rather than the $5.3 million short-term financing plan the council approved days ago.

“Now we’re at the last minute, and we don’t have any other choice,” Stokes said.

Director of Administration Rick Hill told the council that the city “would have realized about $1.9 million out of that restructuring for this year had we moved forward with (the long-term financing),” though Hill’s number would have still fallen at least $1 million short of the figure needed to fill the 2007 budget hole.

Council members voted against the long-term debt refinancing plan last month because the administration could not present hard numbers on how hard an impact the plan would have on the city’s bond rating.

Weill said last month that he voted down the plan under the assumption that the administration was capable of presenting options other than simply tapping the reserve. Weill said he would have preferred the administration present more downsizing possibilities. He maintained that attitude minutes before the vote.

“Folks need to know that Jackson is a lot smaller a town than it was 10 years ago, and we cannot continue to fund through ad valorem taxes what we used to do,” Weill said, adding that he hoped the city would continue to look for ways to cut unnecessary staff.

“I will hold you to your promise to look into outsourcing services and payroll reduction where necessary. … There are some positions that are not necessary, and I encourage the administration to have the political courage to carry that out if necessary—and I stress ‘if necessary.’ You know who those folks are … ."

Crisler said earlier this week that he opposed the reserve tap, and drew the ire of Melton, who looked incapable of producing a balanced budget on time.

Tension was obvious Wednesday when Crisler corrected the mayor for incorrectly identifying a special council meeting that day as a budget meeting. Melton, who was talking to the reporter, replied to Crisler, “I’m not talking to you …goddamned … idiot,” according to the Clarion-Ledger.

Melton argues that shortfalls have always been issues with previous mayors, though council veterans say previous administrations acted in better time for council input on dealing with them. The last administration presented budget plans to the council in July or August—with attached options for potential “tweaking.” Melton’s administration, comparatively, submitted the final 2008 budget within days of the Sept. 15 deadline.

Former Mayor Harvey Johnson, Jr., said the $3 million reserve raid would require another revision regarding the ’08 budget.

“Now they’ll have to go back and do an amendment of the ’08 budget to reflect the decrease in the fund balance,” Johnson said. “They need to get a plan in place to replace that money, or the rating agencies will not like it.”

Hill said he hoped the city would be able to quickly recapture the expenditure, citing a $10,000 increase in municipal court revenue as example. He added, though, that the ’08 budget was extremely tight and warned that replenishing the fund would likely be slow.

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