Finances are again putting McComb in a precarious position.
Accountant and auditor Tommy Lindley said at the city board’s work session Tuesday that the city’s trust account, which encompasses all city funds outside of water and sewer, had shrunk from almost $9 million at the end of fiscal year 2017 to $1.8 million at the end of FY 2019 on Sept. 30.
The general fund’s share of those monies had fallen from $2.4 million in 2016 and $1.9 million in 2017 to just $378,000 on Sept. 30.
“That’s not much cash reserve to have at the end of the year,” Lindley said. “A large part of your financing comes from ad valorem taxes, which don’t really start coming in until February.
“You’re going to have some lean times ... You don’t have enough money to fund your operations till those taxes start coming in.”
He said the decrease in reserve funds over the past two years represented about $84,000 more in spending than revenue received each month, on average.
His projection of what the city needs to operate until January, when holiday sales tax returns start coming back to the city, was $1.3 million.
Mayor Quordiniah Lockley said the city could borrow from a bank and pledge anticipated revenues to pay back the loan, but that would have to be repaid by March 31.
The only other alternative is to borrow the money from a city fund that has the money available. Lockley said the city’s capital improvements fund has about $3 million in it that could be tapped.
Doing that, Lockley said, would give the city until Sept. 30 to repay the capital improvements fund.
Repaying the city fund would require about $115,000 per month to repay, Lindley said, and would have to be cut from elsewhere in the budget.
He said double that, about $231,000, would be needed to pay off the fund and build back an adequate reserve.
Lindley, hired to survey the city’s books just last month, said he had not had a lot of time to examine McComb’s finances, but the numbers he presented were what the records he had been over appeared to show.
“How is our budget even feasible?” Selectman Michael Cameron asked.
“Our budget is feasible, but our revenues have fallen short,” Lockley said. “I did an analysis (of city revenue and spending) last year, and I recommended to the board that you stop doing budget amendments.”
Lockley held a press conference in August last year, just a little more than a month after taking office, to describe the city’s poor financial condition and announce the city’s remedies, including hiring and spending freezes.
“How is this budget accurate if we don’t know what we have?” Selectman Devante Johnson asked by telephone.
Lockley said the annual budget is based on anticipated yearly revenues and what the city expects to spend during the year, and that the Governmental Accounting Standards Board recommends keeping 25% of budgeted spending in reserve each year.
“Our comptroller projected $2 million, and we didn’t have it,” Lockley said.
City Administrator Dirkland Smith recommended the board borrow from the capital improvements fund, and said the city would again freeze most hiring and spending to keep the city from going into the red.
Only the police and fire departments will able to fill vacancies for the time being, and “all major purchases are being curtailed. They will all have to come across my desk,” Smith said.
Johnson and Selectman Ronnie Brock asked how and where the city could make cuts, and Smith said he would “look at all operations.”
Lockley also recommended that the board look at borrowing from the capital improvements fund because “we have to have the money to pay our bills.”
The city’s financial state may delay an effort toward trying to boost the city’s downtown area and draw more businesses to McComb.
Matthew Petro and Jenn Gregory with Retail Strategies pitched their services to promote the city and recruit businesses to available properties.
Petro said the city has attractive possibilities for business development at and near both the Delaware Avenue and Veterans Boulevard exits from Interstate 55.
He said the company typically contracts with cities or economic development groups in three-year deals, renewable at the beginning of each year.
“We’ve never had anybody that didn’t go the full three years,” Petro said.
The contract he proposed carried a $50,000 cost the first year and $40,000 each successive year.
The board thanked Petro and Gregory for the presentation, but was noncommital.
The financial news wasn’t all bad, as insurance agent Scott Oakes told board members that the city’s insurance carrier, Blue Cross Blue Shield of Mississippi, is giving the city a 10 percent rate reduction on health insurance, which will save the city $78,000 from what it paid in premiums this year.
Smith said the impact would be even more pronounced because the city budgeted for a 10 percent increase in premium payments.
Oakes said the city had had fewer claims in the past year, and the average age of covered employes had decreased, and BCBS had rewarded the city for both of those situations.