Here are the speaking points for Mayor A.J. Holloway's presentation to the audience at the Biloxi Chamber's Breakfast with the Mayor, held Wednesday, June 15, 2011 at Edgewater Mall's Food Court.
--- We're working on our municipal budget for Fiscal Year 2012, which begins Oct. 1. I'll be making my recommendation to the City Council in a few weeks.
Right now, we're looking at more of the same of what we've been doing. Our biggest problem since Katrina is that we've been spending more than we've been taking in each year.
Two years ago, we spent $7 million more than we took in, and last year, we cut that to $3.8 million. Some people say that's good, but in my opinion, anytime you are spending more than you are taking in, it's a problem.
As of June 1, we had 37 million in revenue and 35 million in expenses. So we've made progress.
The other thing is our general fund cushion. This is the figure that had been as high as $40 million in the past. Well, with the spending we've done in the past several years, it ain't 40 million anymore. We started the year at 8.6 million and right now it's at 10 million, so we've seen improvement there, too.
The bottom line is that we need to keep watching expenditures, we need to keep the hiring freeze, we need to keep the employee furloughs in place, and, in fact, we may even need to see employees pay a little more on their health insurance.
Mark July 14 on your calendars. That's when we're going to dedicate two of our huge new buildings -- Lighthouse Park &Visitors Center and the Biloxi Library and Civic Center.
We're going through the punch list right now on the civic center, and the library staff has begun moving in 40,000 books. Over at the Visitors Center, the exhibits are installed, and the building in 90 percent complete. The site work and landscaping are being done now.
We could have had them ready to go at the end of this month, but I didn't want to rush it. I want them to be fully open when they open.
• I want to thank everyone who came out for our Preservation in May series last month. We had between 100 and 150 people at each of the events each Thursday. This is a great program.
We're recycling the steel grate that had been on the I-110 bridge. We have two outfalls that feed the pond, and we're using the steel grate to shore up the banks of those outfalls.
We're also going to be repainting and repairing five of our eight water tanks. We'll be re-doing the elevated tanks at Kuhn Street, Bay Vista and Popp's Ferry, and the ground-level tanks at Irish Hill and Greater Avenue. We have eight tanks over all, but we're not having to do any work on the tanks at Maple, Woolmarket or the Crazy Horse.
We're adding a four-way stop sign at the northern end of Big Lake Road, where it intersects with Old Bay Road.
I want to thank all of you for the cooperation and patience out there in the Sunkist and Ancient Oaks neighborhoods. We're doing infrastructure work out there, and so far so good.
Over at the Saenger Theater, we think we've completed all of the exterior repairs. We're waiting for a good rain to make sure all of the leaks are plugged. Once we do that, we'll go out for bids on the interior, which is mainly replastering walls.
At the Swetman House, we're re-finishing all of the floors, and we ought to be completed in three weeks.
FEMA gave us approval last week for the plan to installed an elevator at the Magnolia Hotel. We'll open bids in July.
We also open bids at the end of July on the renovation and restoration of the Sleigh House in the Rue Magnolia. Once we're complete with renovations, we'll take proposals for retail.
The White Avenue Fountain should be back in operation on Friday. We had a leak in the fountain, and we needed to get it repaired.
Our façade program is underway in downtown Biloxi. Four restorations are underway right now -- the Half Shell Oyster House, Gallery 782, the apartments next to the gallery, and dressing up the building that used to house the café at Mary Mahoney's.
The other locations that are in the façade program are the two building south of the Redding House, and the stucco office building on the Rue Magnolia where the Mississippi Lodging Association and Terese Collins have offices.
Background on issues with water bills
I know that you are concerned and mad about the increases that you've seen in your water bill. We've had a terrible drought this year, and plenty of people are using more water that ever to try to keep their grass alive.
That is also the first summer that we've had the big surcharge for the Harrison County Utility Authority.
This situation that we're in right now goes back to revenue shortfalls caused by Hurricane Katrina. Some of the smaller cities didn’t have enough revenue to pay their bills, so the utility authority re-financed its debt. The refinancing used a variable interest rate, which was something that looked like a good idea at the time.
Then the stock market crashed, and we had the financial crisis followed by the recession. As a result, we've seen that interest rate average about six and a half percent. This has cost us an additional $3 million here in Biloxi.
Another issue is that we had 16,000 customers before the storm, and today we have about 11,000. So that means we can't spread the cost.
And, finally, the other thing that happened is that for years we had been able to subsidize the water department by using money from the general fund. We were able to keep the water bills artificially low. Last year, we could no longer afford to do that.
So you had the increasing debt service at the same time we stopped subsidizing the water department.
We did not change the rates for water or sewer. We increased the surcharge because that's where the money is going.
The payment to the Harrison County Utility Authority went from $1.76 per thousand gallons to $4.40 per thousand gallons.
Some people wonder why the bills in Biloxi went up so much, and you don't hear about bills going up in other cities.
The answer is simple. The bills in the other cities were already high. In fact, we are still lower than most of them. We have some of the lowest rates in the entire state.
But I know you don't want to hear that. You want that bill back where it was. I'd like to see it go down some, but I don't know if it will ever be as cheap as it was.
The utility authority needs to see about re-financing this debt. This year, we finally started paying on the principal. The total debt is about $131 million, and Biloxi's share is $56 million.
We are also seeing an increase in residential and commercial customers, which means we can spread the cost.
Background on finances
There are three benchmarks that you look at when looking at government finances.
1. Where you are right now. Are you covering expenses?
2. Where you've been. Has your financial position gotten better or worse?
3. And where you are going. Is your financial position going to improve or deteriorate and why?
I'm going to answer all three of those issues for you this morning.
First off, on our short-term financing, we are in good shape. Our revenues are covering our expenses. We started the year with $8.6 million in our general fund, which is what you would call a financial cushion.
Budget-wise, as of June 1, we had $37 million in revenue and $35 million in expenses. So we have a $2 million positive spread, and our general fund is now at $10 million. We're paying our bills.
The second question is has our financial position improved? Yes it has. We've worked to get our spending in line with our revenue. Since Hurricane Katrina, we had been spending more money than we were taking in.
Two years ago, we had a budget that had a $7 million dollar deficit. Last year at this time, we had a deficit of $2 million and by the end of the fiscal year that deficit had grown to $3.8 million. Since that time, we've cut our expenditures by $3 million and our revenue is up about $2 million. So, yes, our financial condition has improved.
And the final question: What's our financial outlook? We need to stay the course. We need to keep expenditures down. We are not out of the woods yet. We need to continue the furloughs, we need to continue the hiring freeze, and we need to look at employees maybe paying a little more on insurance.
I say this because we've seen our self-insurance fund drop from 3.6 million to 2.4 million in the past couple of years. We're waiting on the figure we need to have, and to meet that figure, we're going to look to employees to pay a fair share.
We've told our directors not to come with any major new spending. We're doing good to hold what we got.