Aldermen Adopt Budget
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A packed City Hall board room listens as Mayor Tommy Reynolds, city aldermen and members of the Water Valley Utilities Commission discuss the city budget, utility finances and the future of the PILOT during a nearly three-hour meeting Aug. 18.
WATER VALLEY – Water Valley aldermen are proposing a three-mill property tax increase as they work toward a final city budget for the coming fiscal year.
The proposed increase would raise the city’s millage rate from 43.5 mills to 46.5 mills and generate an additional $67,917 in property tax revenue. The city’s total ad valorem tax levy is projected at approximately $1.16 million.
Aldermen approved the proposed budget and tax levy for publication following an almost two-hour budget meeting Monday night at City Hall. The action keeps the city on track to hold a required public hearing Sept. 8 before adopting a final budget.
The latest spending plan represents a considerably clearer financial picture than city officials faced earlier this month, when preliminary figures raised the possibility of a roughly $700,000 General Fund shortfall and potential cuts to city departments.
Local CPA Joe Black worked with City Clerk Vivian Snider on the budget details. Black told aldermen during an Aug. 18 meeting that storm-related expenses that distorted projections had been removed and revenues that had not previously been recorded were added to produce a more accurate picture of city finances.
Detailed worksheets were presented to aldermen Monday for further study, and additional revisions are expected before the final budget is adopted.
The proposed General Fund calls for approximately $4.09 million in expenditures while preserving the $2-per-hour employee raises included in the city’s current spending plans for the fire, street and police departments. The largest departmental budgets include approximately $1.16 million for police, $831,334 for fire and $803,188 for public works.
The budget work follows an Aug. 18 meeting between aldermen and members of the Water Valley Utilities Commission, where commissioners presented a detailed financial position showing why they contend the electric system currently does not have sufficient unrestricted revenue to continue its longstanding payment in lieu of taxes, or PILOT, at its previous level of $523,000 annually.
The Utility Commission reported approximately $3.2 million in anticipated Winter Storm Fern costs and another $2.94 million as the utility’s estimated share of the planned second substation. After accounting for available and anticipated funds and other commitments, the commission reported a projected $3.78 million shortfall.
Engineer Jeff Atwell with Atwell and Gent also urged city officials to view the current round of grants and infrastructure work as a rare opportunity to rebuild an electric system he said has suffered from decades of underinvestment. He said the combination of federal, state and regional grants allows Water Valley to make improvements at roughly 42 cents on the dollar and called it a “generational opportunity” that may not come again.
Atwell said the projects are interconnected, including a second delivery point, substation improvements and conversion of portions of the system from 4-kilovolt to 13-kilovolt service. He said the work is intended to improve reliability, reduce system losses and position the electric system for the next several decades.
Atwell told officials the utility would likely need to borrow approximately $3.2 million to cover storm costs while awaiting reimbursements and completing permanent repairs.
The Utility Commission has stopped the monthly PILOT payments following the winter storm. The city had budgeted approximately $522,000 from the payment during the current fiscal year, an amount equal to roughly 16 percent of its General Fund budget.
City and utility officials are expected to continue working on a cost-sharing agreement that would provide funding from the Utility Commission to the city for expenses related to utility operations.
The city’s public hearing on the proposed budget and three-mill tax increase will be held at 6:30 p.m. Tuesday, Sept. 8, at City Hall.
After the hearing, aldermen can make additional revisions before adopting the final budget. The city’s new fiscal year begins Oct. 1.
