Mississippi losing $50 million a year by only collecting 56% of fees from Jackson water system

JACKSON, Miss. (AP) — Mississippi’s capital is collecting only a little more than half of the money it bills for water use, far below the rate at which most American cities obtain such fees, Jackson’s federally appointed water manager said Monday.

Ted Henifin, appointed in November by a federal court to help improve Jackson’s troubled water system, told reporters the city is collecting about 56% of the water fees it issues. That compares to an industry-standard above 95%, he said. The uncollected bills equate to about $50 million a year in lost revenue for the city, where roughly a quarter of residents live in poverty.

The revenue losses sharpen the financial strain of the hefty debt burden Jackson faces for its water system.

“We need to get our financial house in order for the water system,” Henifin said. “In order to do that, we have to get the debt off the books.”

The city needs to pay down about $280 million in outstanding debt on the water system. About $23 million of that is private bond debt the city must pay annually, Henifin said. On top of the debt, the city needs enough dollars for costly improvements to a water system that has fallen into disrepair.

Repeated breakdowns in Jackson have caused many in the city of about 150,000 residents to go days and weeks at a time without safe running water. Last August and September, people waited in lines for water to drink, bathe, cook and flush toilets.

Henifin, who spoke Monday at a forum sponsored by Mississippi State University’s John C. Stennis Institute of Government and the Capitol press corps, said Jackson should generate enough revenue to reinvest $15-20 million back in the water system annually.

To retire the debt, Henifin said the city plans to dip into a $600 million trove of federal funds it received for water repairs. Congress approved the funds in the $1.7 trillion spending bill President Joe Biden signed in December. But the revenue Jackson loses through uncollected water bills hampers the city’s ability to pay its debts.

Henifin believes there are over 7,000 properties in Jackson using water without paying for it. JXN Water, the corporation Henifin formed to manage water infrastructure projects, has hired firms to find data revealing what properties might not be paying. The corporation has also hired a contractor to install new water meters.

Jackson has had problems with its water metering system for years. The city hired Siemens Industry Inc. under a $90 million contract in 2012 to install new meters. But some customers were issued inaccurate bills, and some did not receive bills for long periods of time. Jackson sued Siemens in 2019, and the company agreed to a $90 million settlement in 2020.

Jackson is on pace to finish installing new meters by the end of the year. Then, the city will start shutting off water service at houses with unpaid bills.

“You can’t get people to get used to paying their water bill with no consequence,” Henifin said. “Shutoffs are a blunt instrument, and it’s something we don’t really love to do.”

Henifin said the city will create guardrails for people who can’t afford to pay their bills.

As a result of the faulty Siemens meters, few people believe their water bills are accurate. Henifin said the city needs time to earn back the trust of residents. In the meantime, his team is developing a temporary rate structure based on a “property attribute” like square footage.

The rate would be applied based on the square footage of properties rather than how much water, measured through meters, properties use. The city would eventually transition back to a meter-based system, Henifin said. But it is unclear whether the city can develop a plan that complies with a new state law.

In January, Henifin released a proposal calling for a monthly cap on water fees for homes and commercial properties. The proposed solution was a response to the Siemens incident and the loss of revenue Jackson has experienced as its tax base eroded over the past few decades.

But that proposal was blocked in the 2023 legislation session after lawmakers passed a bill requiring localities to base water bills on personal consumption. Mississippi Gov. Tate Reeves signed the legislation in April. Henifin said his team is developing a plan that complies with the law.

Henifin is six months into what he has said will be a one-year term managing Jackson’s water system.

“It took decades to get to where we are. It’s going to take a little while to get out of this,” he said.

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