It will be awhile before JXN Water can raise water/sewer rates. U.S. District Judge Henry Wingate enjoined the rate hike so the city of Jackson could examine JXN Water's financial records.
The war over the water rates began in April when JXN Water Manager Ted Henifin proposed an increase. Judge Wingate blocked him from doing so. Mr. Henifin said he was going to raise the rates in December on Halloween Day. Judge Wingate immediately held an emergency hearing for November 5.
The JXN Water manager explained the water/sewer system needs $115 million per year to operate. JXN Water must also make bond payments of $20 million per year as well.
Mr. Henifin said a rate increase place the system on sounder financial footing. If no rate increase takes place, JXN Water will face deficits of $34 million in 2025 and $44 million in 2026. Deficits will remain over $27 million through 2029.
JXN Water does enjoy a congressional appropriation of $850 million. However, the funds can only be spent on capital projects, not operation expenses or debt. An amendment that will re-direct $54 million towards operations is stalled in the Senate due to the government shutdown.
Mr. Henifin said if he can get the rate increase and the re-directed funds, he can substantially cut the deficit as collection rates rise. The Receiver also said there will be inflationary rate increases over the next three years, a standard practice in the industry.
JXN Water's collection rate stands at 71%. The Receiver projects it to increase 5% a year.
Judge Wingate continued the hearing to November 13 after spending all day on the matter. The Court held the hearing last week and continued it to this morning.
Today's battled hinged on whether the city of Jackson could review JXN Water's financial records. Attorney Drew Martin said the city needed to do so so it could determine whether a rate increased was justified.
JXN Water had said it would allow an accountant hired by the city to review its books but he would not be able to share any information with his client. The Horhn administration obviously did not agree with JXN Water so it brought the matter before Judge Wingate.
Judge Wingate ordered both sides to figure things out and reach an agreement before today's hearing. JXN Water granted the accountant full access to its financial records and software. He will be able to share the information with the Horhn administration. No records can be released to the public unless JXN Water is given 48 hour notice so it can object.
Mr. Martin said the city needed thirty days to examine the records, analyze, and submit a report to the Court. Judge Wingate asked the Receiver what the time frame was on implementing a rate increase.
Mr. Henifin replied JXN Water was "on a tight time frame because we have a four year projection. Rate increase can only happen every 365 days per the stipulated order. This one needs to go into place by January 1 so we can do the next one in 2027 (Inflationary rate increase.). We need to do these to reach financial solvency in 2029. A delay means extending the model another year. We have ongoing needs unmet with the sewer system. It means we can't get a necessary loan from MDEQ without a rate increase." The Receiver pointed out there are two new sewer overflows that cost more than "the finds JXN Water has access to.
"What is the schedule of completion," asked Judge Wingate. "If we put the rate increase on December 31, we would need to start advertising the rate increase on December 1. The rate increase needs to be approved by November 30," answered the Receiver.
Mr. Martin contested the JXN Water Manager, "There are other possibilities besides a rate increase but we don't know what they are because we don't have enough information."
Judge Wingate asked the city attorney about "target dates." Mr. Martin said the city wanted to set December 15 as a target date for completing its review of JXN Water's financial records. "We are talking about a difference of 15 days. I don't see how it is material if we are trying to do things right," argued the lawyer.
"If we push into 2026, we won't be able to make any inflationary increases until late 2027. It pushes our solvency down the road," protested JXN Water attorney Mitch McGuffie. However, Mr. Martin questioned the amount of the rate increase. "To get that 12% (rate increase), you have to do some interesting math," claimed Drew Martin.
"Every month of delay means we lose $1 million per month. It means we are involsvent longer. We needed this in April," argued Mr. McGuffie.
Judge Wingate gave the city until December 15 to complete its financial review. The City Council meets on December 16.
"I understand that JXN Water objects to these dates because it is of the opinion that this urgent matter needs to be addressed earlier and quicker. But I'm going to give Mr. Thomas (accountant) a chance to finish up his analysis and this is the primary driving force of the continuance," decreed Judge Wingate.
The Court continued the injunction against the rate hike.
15 comments:
Vendors are going to walk. Nobody is going to keep working for free.
I see the problem, a federal judge with 0 business experience. He’s using the congressional fix, let’s push it down the road and hope it magically fixes itself.
Jxn Water has the authority to raise these rates. The order is clear. He
doesn't have to come back to the court.
Judge Wingate is very much on-brand. Why make a decision when it can be delayed until later, even much later, or even beyond the point where the decision actually makes a difference?
Is it true or not true that JXN Water can raise rates without the approval of Judge Wingate? If it can raise rates without his approval, then why all this delay?
The city had already agreed Jxn Water
could raise the rates when they signed
the order.
What is Wingate’s problem besides not wanting to make a decision? He is usually pretty conservative, but he is bending over backwards not to rule against Jackson’s wishes. I don’t get it.
Why does anyone live in this city???????
The vestige once known as the City of Jackson is doomed
"Mr. Martin contested the JXN Water Manager, "There are other possibilities besides a rate increase but we don't know what they are because we don't have enough information."
There are other answers, but we don't know what they are. The finest legal mind in the country.
Why is a federal involved in this
Non-expert Wingate green lights an effort by other non-experts to cherry pick.
Shame on Judge Wingate. He has totally screwed this up. And he did it with the full knowledge of how the city of Jackson "works".
I am incredibly disappointed in him. I can not believe he is doing this. He was doing a good job then all of a sudden, totally changes gear. Instead of working to get things done, he has thrown 5 monkey wrenches into the situation.
My opinion of him just sank to the bottom of the barrel.
The next time it blows up will be on Wingate. Now I'm not making any accusations but it is interesting that the fault will lie with a succession of black "leaders".
The COJ water system is the only sysem on the planet whose rates are determined by a federal judge. I took federal jurisdiction class in law school, but must have missed the cases which would vest jurisdiction in this subject matter. It will be at least 6 to 8 months from now before anything changes.
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