Hernando officials raise garbage rates to combat $2.6 million utility shortfall

(UPDATED STORY, INCLUDES COMMENTS FROM ALDERMAN BEN PIPER)

Key Points

• Financial Crisis: Hernando’s Utility Fund faces a $2.6 million shortfall, leaving the city with a critical two-month “runway” before the fund becomes insolvent.
• Rates Raised: The Board of Aldermen voted to increase monthly garbage rates from $22 to $28—a 27 percent hike—to cover actual contract costs from Waste Connections.
• Internal Friction: Board members are demanding higher standards of transparency and austerity, with some calling the lack of financial reporting “shocking” and “premature” without deeper budget cuts.

HERNANDO, Miss. — Facing a looming financial crisis that could leave the city’s utility operations insolvent within 60 days, the Hernando Board of Aldermen voted Tuesday night to hike garbage collection fees and authorized an emergency transfer of funds to keep the city fund afloat.

The meeting centered on a staggering $2.6 million projected deficit in the Utility Fund, an enterprise account intended to be self-sustaining. Mayor Chip Johnson and Chief Financial Officer Ed Green warned that without immediate intervention, the fund would lack the cash to meet payroll and operational expenses by early spring.

“We are in our straits with a two-month leeway,” Green told the board, noting that the fund holds only about $30,000 in immediate cash.

Board Members React to “Shocking” Disclosures

The announcement of the shortfall prompted an outpouring of frustration from aldermen, who questioned how such significant errors went unnoticed during the budgeting process. Mayor Johnson openly admitted to the board that the deficit was caused by “mistakes in the budget,” including overstated revenues and a failure to account for recurring contract increases.

Alderman Ben Piper expressed deep disappointment in the administration’s handling of the city’s finances. “I am incredibly disappointed and upset with the mistakes made in this budgeting process,” Piper said. “I plan to work to correct them and hold those in the wrong accountable.”

Piper noted that a 2017 ordinance, which should have automatically raised water and sewer rates by three percent annually, had been ignored for years. He emphasized the need to find root causes before making permanent changes. “It is important to find the root causes, make any necessary budget changes, and weigh any increases to rates,” Piper added.

Alderman Kit Kitchens, a new member of the board this year, called the lack of transparency “shocking.” Kitchens argued that if the board had been informed that the public works department was losing millions, they could have implemented “government-wide austerity and deep cuts” instead of waiting until the city was two months from insolvency.

Alderman Chad Wicker echoed these concerns, stating the deficit raises “serious and legitimate questions about budget forecasting, revenue projections, and expense controls.” Wicker noted that while the board must ensure services continue, residents deserve leadership that “confronts difficult realities rather than deferring them.”

Garbage Rate Hike and Budget Errors

To address the immediate gap, the board voted to increase monthly garbage rates from $22 to $28, with a $1 increase for extra cans. The new rate reflects the actual cost charged by Waste Connections, which had not been fully passed along to residents for at least two years.

In addition to overstated revenues, officials discovered approximately $700,000 in unpaid invoices from 2024 that had reportedly been left on a former manager’s desk.

Short-Term Stabilization

The board approved a $270,000 budget amendment to transfer interest from the Mississippi Modernization Act Fund to the Utility Fund for short-term cash flow. However, board members signaled that one-time transfers are not a substitute for structural reform.

“I pray solutions can be found and agreed to by a majority of this board that will move our city forward,” Piper said.

Proposed increases to water and sewer rates were tabled until the February 20 meeting to allow for a deeper audit of the numbers and potential austerity measures.

Public Safety and Infrastructure

In other business, the board:

• Approved a $58,000 city match for a Leo grant for new dispatch consoles.
• Approved a grant application for a new tornado siren program.
• Adopted the 2024 International Building Code and 2023 National Electric Code to maintain safety standards and fire ratings.

The Board of Aldermen will reconvene in late February to discuss the remaining utility rates and the results of the Finance Committee’s budget review.