Jackson Jambalaya

The hard feelings that developed between Jackson Mayor Tony Yarber and several members of the 1% Sales Tax Commission at the March 1 meeting continue to linger.  Anna Wolfe posted a follow-up story on that particular food fight last Friday.  Her story is posted below along with some color commentary by yours truly.  Enjoy.

At the conclusion of a contentious one-cent sales tax meeting March 1, commissioners approved a master plan that could prevent Jackson from obtaining the $90 million loan it has worked to obtain for over a year.

In an interview with The Clarion-Ledger Wednesday evening, Jackson Mayor Tony Yarber first said he would not protest the plan, then wouldn't say if he would abide by it. The plan requires the city to get commission approval before entering any debt obligation to be paid back with one-cent funds.

"I'm going to follow the state law," Yarber said, calling the commission's plan an attempt to supersede Mississippi statute.

Yarber was referencing the law the state wrote to allow the city to set up the sales tax program, which states Jackson is "authorized to incur debt, including bonds, notes or other evidences of indebtedness, for the purpose of paying the costs of road and street repair, reconstruction and resurfacing projects based on traffic patterns, need and usage, and to pay the costs of water, sewer and drainage projects in accordance with a master plan adopted by the commission."

 Ms. Wolfe states the law correctly.  Section 27-65-241* of the Mississippi Code allows the city to securitize the 1% sales tax revenue and borrow against future collections.  It does not  give the 1% Sales Tax Commission the power to approve the borrowing.  However, Ms .Wolfe continues.

The problem is, there's been no approved master plan up until this point.

"Expenditures of the revenue from the tax authorized to be imposed pursuant to this section shall be made at the discretion of the governing authorities of the municipality if the expenditures comply with the master plan. The commission shall monitor the compliance of the municipality with the master plan," the law states.

 Ah.... there is a problem.  The commission did not approve a master plan until March 1.  The plan approved was submitted by Commissioner Ted Duckworth (Read the plan here.)  The law does not state that only the Mayor can submit a master plan.  Anyone can submit a master plan to the commission.

However, the law does give control over how the funds are spent to the commission.  The city can borrow as much money as it can against the 1% sales tax - but it can only spend the money on projects approved by the commission.  Thus the city may indeed get a honeypot of gold that makes every contractor and politico drool but the commission will direct where the money goes by selecting the projects funded by the loan.  However, an administration so inclined to favor its friends could still do so but only on project approved by the commission in its master plan. 

Just two days before the commission's last meeting, the Jackson City Council voted to move forward with the $90 million deal, even though the commission had not approved it.

Commissioners argue that the city cannot expend the one-cent money, or, by extension, obligate it to pay back a loan, without its approval. Some characterize the push to obtain the loan as a political move considering the upcoming municipal election.

"Here we are two months before an election and trying to cram though something that's going to tie the city up for the next dozen years when we don't know who the administration is going to be — City Council or the mayor — two months from now," said sales tax commissioner Pete Perry.

JJ must respectfully and humbly disagree with Mr. Perry on this point.  The legislature clearly stated that the city has the power to borrow against the 1% sales tax.  If it wanted to give the commission the power to explicitly approve the borrowing, it would have done so with the same language. The legislature did not state that the commission could approve the borrowing of such funds.  It gave that power to the city.  The commission can control how the funds are spent but it can't stop the city from actually securitizing the revenue.

It just happens to be a coincidence that the big push to borrow the money happens right before the municipal elections.  Nothing like a pot of gold to promise to contractors and tell the public "look what we are doing for y'all, don't forget to vote for me."  One last shot to get everybody paid before the electoral earthquakes take place in May.  Then there is the matter of going to the Mississippi Development Bank:

Though the city continues to argue that the commission doesn't have the authority to prevent it from leveraging the one-cent funds, officials confirmed to The Clarion-Ledger that the Mississippi Development Bank has decided not to accept the city's loan application until it's clear the commission is on board. So regardless how the law is to be interpreted, the commission has won veto power in this case.

Now, Yarber said he plans to challenge everyone involved in this loan to follow the law and compel those responsible for enforcing the law to get involved. He would not go into further detail about his strategy.

Keep in mind that the city did not submit a loan application to the bank.  This correspondent attended the March meeting of the MDB board and the loan was not even discussed.  The Executive Director told this correspondent that the city had not submitted any paperwork of any kind pertaining to a loan.  It appears bank officials don't want to get involved in approving a loan unless the commission and city are playing on the same sheet of music.  They probably wanted to at least see a master plan before it reviews anything else from the city.

It is not clear what the Mayor meant in his promises to "challenge" and "compel". 

Notably, the 2013 Mississippi Code included language that said, "No expenditure of revenue from the special sales tax authorized by this section may be made without the prior approval of the expenditure by the commission." This has been removed from the current law.

Stay tuned Sunday for The Clarion-Ledger's Jackson infrastructure deep-dive report.

 The primary purpose of this loan is to fund the Tiger Grant project for North State Street and West County Line Road.  The amount of the Tiger Grant shot up from $16.5 million when it was first announced in 2015  to $38.5 million.  The proposed project will connect West County Line Road to North State Street but provide an overpass for the railroad.  The matching fund requirement increased the city's share from 20% to 50%.  The remaining funds would be used for commission-approved projects.

It is the opinion of this website that the funds would be better used for other infrastructure projects.  However, spending millions of dollars to create a railroad overpass and open up land for development around Tougaloo  is an option that should be rejected.  Spend the money on North State Street but there are plenty of other areas that need help. 


* Section 27-65-241 of the Mississippi Code states:

(h) The commission shall, with input from the municipality, establish a master plan for road and street repair, reconstruction and resurfacing projects based on traffic patterns, need and usage, and for water, sewer and drainage projects. Expenditures of the revenue from the tax authorized to be imposed pursuant to this section shall be made at the discretion of the governing authorities of the municipality if the expenditures comply with the master plan. The commission shall monitor the compliance of the municipality with the master plan.

(8) The governing authorities of any municipality that levies the special sales tax authorized under this section are authorized to incur debt, including bonds, notes or other evidences of indebtedness, for the purpose of paying the costs of road and street repair, reconstruction and resurfacing projects based on traffic patterns, need and usage, and to pay the costs of water, sewer and drainage projects in accordance with a master plan adopted by the commission established pursuant to subsection (7) of this section. Any bonds or notes issued to pay such costs may be secured by the proceeds of the special sales tax levied pursuant to this section or may be general obligations of the municipality and shall satisfy the requirements for the issuance of debt provided by Sections 21-33-313 through 21-33-323.