A federal court Thursday halted, for now, a rate increase the manager of Jackson’s beleaguered water and sewer systems has for months said is necessary to keep the utility afloat. 

U.S. District Court Judge Henry Wingate said he needed more time to make a decision, adding he would have an update on the matter by the next hearing on Nov. 19. 

JXN Water also received news Wednesday that Congress approved to set aside $54 million for daily operations, Ted Henifin, the manager of the third-party utility, said. Lawmakers had already awarded the funds to the city, but initially did so only for capital projects. 

Since 2022, the utility has made relatively fast strides improving water pressure throughout Jackson as well as repairing burst sewer lines across the city. Moreover, for the first time in a decade, the water system is compliant with all federal drinking water regulations, Henifin said last week. 

But without added revenue, JXN Water said it will continue to lose money and be unable to address sewer system repairs, including two major, ongoing overflows – one on Mill Street and another on I-55 near Home Depot.

Since the spring, Henifin has pleaded with the court for a rate increase after JXN Water ran out of its initial $150 million allocated for daily system upkeep. The hike would raise the average Jacksonian’s monthly bill – which includes costs for drinking water as well as garbage pickup and wastewater – by 12%, the utility says. 

City officials, including Mayor John Horhn as well as all of the Jackson City Council, have argued the utility shouldn’t be able to charge more until it collects payments from a broader swath of the city. 

Even if JXN Water had a 100% collections rate – it currently sits around 70%, far below the national average of over 90% – those bills wouldn’t yield enough revenue to keep the utility from losing money, Henifin has repeatedly told critics of his proposal. 

Jackson officials, attorneys for the ACLU, and Rep. Fabian Nelson, a Democrat whose district includes south Jackson, all spoke against the rate increase during a status conference in front of Wingate on Thursday. Wingate appointed Henifin to lead the city’s water recovery in 2022. 

Jackson City Attorney Drew Martin criticized JXN Water for not considering sooner its revenue needs. This increase would mark the second rate hike since Henifin took over. The manager previously has said it took a while to realize how much money the system needed to function. 

“What we hear from residents is ‘you can’t just spend money first and assume we can afford it,’” Martin said Thursday. 

In September, the utility ramped up its collection efforts, shutting off about 1,800 accounts. JXN Water has disconnected 4,403 total accounts since the start of 2025, adding it plans to continue disconnecting 500 to 1,000 accounts per week. It did not say how many accounts have since caught up or have been reconnected. The utility said it plans to have “worked” all accounts by mid-2026. 

In a court filing last week, Nelson submitted letters from constituents with thousands of dollars in water debt. After not receiving a bill for the first time in years, they couldn’t afford the down payment JXN Water requires to keep their taps on, the letters said. 

For others who wrote in, the utility told them they had high charges because of a leak at their home, although some claimed to have hired plumbers who told them the opposite. Some constituents complained of rude representatives from the JXN Water call center. 

Wingate himself said he called the center as an experiment and got conflicting answers from different operators. Henifin admitted Thursday the utility needs to better train its operators, which he said would begin around the new year.

 “JXN Water has forgotten about the people and the citizens,” Nelson told the court while also praising the progress Henifin’s team has made so far.

The utility initially planned to send a notice of the rate increase to customers on Nov. 15 and for the change to take effect Dec. 15. In Wingate’s 2022 order that put Henifin in charge, the language doesn’t say the manager needs the court’s approval to implement a rate increase.

But at the eleventh hour of Thursday’s conference, Wingate enjoined, or stopped, Henifin from moving forward. JXN Water attorneys said they would need a decision by the end of November to enact the rate hike by the end of 2025, leading to the judge setting the next conference for Nov. 19. 

The two-day hearing, which began last week, looked in-depth at a number of issues, including both the city and JXN Water alleging the other owes it money.

‘More than frustrating’

Henifin on Thursday discussed the city’s water debt, which as of October was $6.9 million. Most of that is from leaks at the Jackson Zoo, which should be fixed in the next two to three weeks, Jackson’s chief administrative officer Pieter Teeuwissen said.

But in the meantime, Henifin said, JXN Water has held “hostage” $6.3 million the utility owes the city in sanitation fees. Because residents pay for garbage pickup in the water bill, that money first goes to JXN Water. 

Wingate questioned the utility chief about withholding those funds. Henifin said JXN Water has spent the money to help keep its daily operations afloat. When the judge asked Henifin what authority allowed that power, he admitted he had “none.” The manager said the utility will pay back the city once Jackson pays its water debt. 

Teeuwissen and other city officials criticized JXN Water, saying not having sanitation revenue puts a strain on Jackson’s budget. Martin, the city attorney, said “it is more than frustrating” to hear Henifin withheld the funds without any authority. 

JXN Water’s books and help from the Legislature

Horhn reaffirmed his stance Thursday against the proposed rate increase. The mayor is hopeful the state Legislature will work with him in the 2026 session to find other streams of revenue to invest into the water and sewer systems, and said it’s premature to raise rates before seeing what that may look like. 

Horhn offered several suggestions to lawmakers in October, such as raising the sales tax or diverting funds from the Capitol Complex Improvement District.

City officials also appealed to Wingate to allow access to JXN Water’s financial records, stating they couldn’t agree to a rate increase without having that information. 

While Henifin last week agreed to do so, he later asked to condition that access to prevent records from becoming public. Without context, he argued, it’d be easy for someone to misinterpret the numbers. The 2022 order gave Henifin the power to run the utility without being subject to public record laws. 

After initially pushing back on the conditions, the city said it would agree to a protection order preventing the records from becoming public without Henifin’s approval.