The capital city’s third-party water and sewer utility is again raising alarms over its inability to fund operations. JXN Water, in a Monday court filing, said it will continue to be “insolvent” without a rate increase or another large influx of money.

“The System is barreling toward insolvency, meaning it won’t be able to deliver water and
sewer services to citizens because system operations (will) shut down due to the lack of sufficient
funds,” the utility wrote.

JXN Water, the utility said, is losing $3 million a month. Many of its positions, such as plant operators and repair crews, are contracted out. The utility said it owes $31 million to those contractors after months of not being able to make payments. The $150 million the federal government set aside for operating expenses ran dry by May, the filing says.

Ted Henifin, the court-appointed head of JXN Water, pleaded with U.S. District Judge Henry Wingate in recent hearings to approve a 12% rate increase he first proposed in April. Wingate, though, insisted on exhausting all other funding options before raising rates in a city with a lower median income and higher poverty rate than surrounding areas.

“My team has repeatedly warned the parties and Court of the critical state of the system’s finances, which have reached a daunting level,” Henifin wrote in the report.

Both the Jackson City Council and recently elected Mayor John Horhn have come out against the proposed increase. Only Wingate’s approval, though, is necessary for the rate hike to move forward. City officials have called on the utility to improve collection rates, which are about 70%, before increasing rates. Even with 100% bill collections, though, Henifin maintains JXN Water would still operate at a deficit.

Wingate initially delayed ruling on the rate increase to track down the city’s spending from its settlement with Siemens over faulty water meters. The judge issued subpoenas in July to 18 different parties related to the city and the settlement, but it’s unclear how many have been fulfilled.

Wingate also prioritized chasing large debts from apartment complexes. Last week, WLBT reported, JXN Water arrived at a payment plan with Tracewood Apartments to resolve $910,000 in overdue bills. The judge is also overseeing an ongoing lawsuit between the utility and Blossom Apartments, which JXN Water says owes $400,000 in debt.

Aisha Carson, JXN Water’s communications officer, told Mississippi Today the utility hasn’t heard any updates from Wingate as far as addressing the rate proposal.

Carson said as of now, day-to-day services haven’t changed. Without giving a timeline, though, she added JXN Water could have to scale back certain operations at some point.

“That doesn’t include our large capital projects, but it will include things like field crews, our ability to respond to water leaks or sewer leaks that come up,” Carson said.

On top of reduced services, the utility also warned of impacts to Jackson’s finances. Part of the revenue JXN Water says it needs is to pay off the water system’s debt, of which it owes $5 million by Dec. 1. If it’s unable to tackle the debt, “sales tax revenues collected by the City will be intercepted and used for debt service beginning November 2025 and continue until debt service is paid,” Monday’s report said. Such diversions could reduce Jackson’s revenue by $7.5 million per year, it added.

The report, which JXN Water filed as a supplement to it’s required financial management plan, listed options for temporary relief, such as converting itself to a public water authority so that it can issue tax-exempt bonds — something the state Legislature paved the way for last session — and securing an “Emergency Drinking Water Loan” from the state Health Department. The former, Carson said, would require approval “from Wingate and/or the Legislature.”

The utility also raised the potential of privatization or a public-private partnership, saying it “understands the City may be interested” in either option.

“(JXN Water) wants to be on written record that the financial crisis has gotten to the point where if the City proposes privatization, we believe it needs to be seriously considered,” the report said.

The report also called on the city to, if possible, issue bonds to support the water system directly or help pay off debt.

Mississippi Today reached out to city officials for comment on Tuesday morning and will update this post if the city responds.

Wingate: Customers still not receiving bills

On Tuesday afternoon, Wingate ordered JXN Water to establish a self-reporting method for customers who don’t receive bills.

“Despite prior remedial efforts, the Court has received credible information that a substantial number of customers continue to receive no monthly bill, leaving revenues uncollected and accountability diminished,” the judge wrote.

Wingate went on to write, “to this day a significant percentage of accounts in Jackson are either unmetered, inaccurately metered, or not billed altogether.” Henifin, though, has recently said almost all customers have new meters the utility and city have installed in recent years. While the utility says there are over 11,000 accounts with meters but don’t pay bills, it’s unclear how many people aren’t receiving bills altogether.

“These failures have carried real consequences,” Wingate added. “They erode public trust. They place disproportionate burdens on those customers who do receive bills, often inflated, while their neighbors may receive none.”

The order requires JXN Water to set up ways for customers to reach out online, by telephone, or in person to tell the utility if they haven’t received a bill for at least 60 days. It also authorizes JXN Water to offer customers amnesty from late penalties if a customer reports unbilled usage before Dec. 31.

Wingate set a hearing for Sept. 19 for the utility and city to give their progress on locating unbilled customers.