“Of the 17 years I’ve been a councilman, this is the tightest budgets I’ve ever seen,” said Jimmy Gill at a Wednesday budget hearing.

The reason for the city’s financial angst is the closing of Pilgrim’s Pride, which means losses for the Electric Department of $1.2 million per year or 1.3 percent of its budget; the Water Department is losing 12.3 percent of its budget, or a little more than half a million dollars; Wastewater is losing $1.6 million in revenue, and the Gas Department, $1.3 million, for a total loss to the city of $4 million.

“We are dealing with the impact of the closing of Pilgrim’s Pride,” said Utilities General Manager Gary Scroggins. “We can’t use our reserves or Capital Infrastructure Fund to make up for our losses forever. We’ll have to come back and ask for rate increases sometime to make up for an estimated $1 million in debt service.”

The debt service on a State Revolving Fund loan to build a new federally mandated $24 million sewage treatment plant would begin in two years.

“We just can’t make up for $1.6 million,” said Water/Wastewater Manager John Stockton. “The rubber is going to hit the road in 2011 or 2012.”

Stockton said his budgets also took a hit from the reduction in new construction impact fees.

“They’re not building as many houses as they did in 2007 and 2008, so there is not as much coming in,” said Stockton. “Any developers with anything planned came in and paid, but didn’t plat a subdivision in 2009 and probably will not for the next two year until they build down their inventory of lots.”

Scroggins said he and Stockton had gone over “line by line” of the budget.

“If we could get a thousand out, we did it,” said Scroggins.

Council President Ronnie Marks asked for a rate-increase reprieve.

“Is there any way we can get away from a rate increase through the year, at least until we can determine the impact of Pilgrim’s Pride?” asked Marks.

Stockton said he has as much as $600,000 to $700,000 in operating reserve funds.

“It is not obligated to anything,” said Stockton. “We could use a portion of the operating reserve throughout the year and come Oct. 1 we don’t have to have a rate increase.”

But once the Wastewater Department must begin paying debt service on the state loan, Stockton said he could wind up with a $1 million deficit without a rate increase.

Gas Department

Gas Department Manager Steve Carter told the council that while his revenues are down by $1.3 million from the Pilgrim’s Pride closing, he is not having to purchase as much gas so, “When I’m not selling, I’m not buying.”

Carter asked for permission to borrow $350,000 from the Electric Department to be paid back over the next five years to purchase an additional 20 acres to expand his Leak City testing facility off Sanderfer Road East. He said from $110,000 to $140,000 would be used to build an addition on the existing facility with the remainder used for the land purchase.

Carter hosts gas departments from across the state and nation. He said he would like to expand to include testing facilities for fire departments and police departments.

Marks said he would like to see a detailed plan for a multi-use facility before approving the financial arrangement.

The council recommended that Carter take the Leak City expansion as a separate item from his overall $7.3 million budget.

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