JXN Water is losing money at a rate it can’t sustain, according to a financial outlook it released last week, as the federal dollars it received to run day-to-day operations are set to run out next month.

Ted Henifin, who manages the third-party provider, told Mississippi Today on Thursday that the funding shortfall may extend repair times for line breaks, and that the utility will look to once again raise rates on customers’ water bills. Henifin explained that various factors — such as debt payments, higher-than-expected operating costs, and slower-than-expected collections gains — have left the water utility in a precarious position where it’s now losing $3 million a month.

“Gone from a water disaster to a bit of financial disaster or so,” Henifin described.

The federal government set aside a historic $800 million for Jackson to fix its water and sewer systems in 2022, with $600 million of that tied specifically to the water system. That included $150 million of “flexible” funding, which JXN Water has used mostly for line repairs as well as on a contract with Jacobs to run the day-to-day operations of the system. The rest of the $600 million was intended for bigger, capital projects.

But the $150 million, Henifin said, is on track to run out in April. He said JXN Water will look for grants and low-interest loans to hold its operations together, as well as work with Congress to free up some of the $450 million — the amount intended for larger projects — for operations spending.

The water provider is also set to impose an almost 12% rate increase on customers’ water bills this spring — just under $9 per month for the average resident — the second rate hike in as many years (the utility a year ago raised rates on average $10 per month). While the 2022 federal order requires it to put rate increases before the Jackson City Council, JXN Water only needs the approval of overseeing U.S. District Judge Henry Wingate.

In addition to higher-than-expected operating costs, such as fixing line breaks, Henifin said the utility was also unsuccessful in retiring some of the city’s debt due to federal constraints over how it spends the $450 million pot. As a result, JXN Water is paying $1.5 million a month, or half of its total losses, in debt services.

Meanwhile, the utility’s revenue collection rate of 70% is an improvement from a year ago, when it was under 60%, but it’s still far below the national average. Last year, Henifin told Mississippi Today in order to make the water system self-sustainable by the time federal funding runs out, the rate needs to reach 80% in 2025 and 90% in 2026. The financial report says there are 14,000 accounts that receive water but aren’t paying bills.

Henifin admitted on Thursday, though, that even if collection rates were at 100%, JXN Water would still be losing money.

“It’s really the running out of the federal funds and not having closed that gap on local revenues,” he said. “Error on our part maybe that we didn’t focus on this earlier, but we were really trying to get the water system working.”

Last week’s financial plan added that a decision from the 5th U.S. Circuit Court of Appeals over whether to release SNAP recipient data is expected within the next two months. JXN Water last year introduced a first-of-its-kind discount for SNAP recipients, but both federal and state officials appealed an order from Wingate to release the names of those recipients, preventing the utility from automatically applying those discounts.

To help free up funding for the utility, Rep. Chris Bell, D-Jackson, wrote a bill which would allow JXN Water to become a water authority for the purpose of accessing tax-exempt bonds or loans. The bill now just needs to pass a floor vote in the Senate.

Henifin added that, after some initial uncertainty, JXN Water’s current funding won’t be impacted by the Trump administration’s recent freezing of federal grant funds.

He also said the funds they do have access to are being used to make major improvements, such as fixing the membrane trains, filters and sediment basins at the O.B. Curtis treatment plant.

“I think it’s a pretty bright future,” Henifin said. “If we can just get over this little cashflow hump we’re in good shape.”

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