A recent audit of the City of Picayune for the fiscal year of 2005-2006 reflects more than $1 million in utility fund losses.

The losses are reportedly attributed to the lack of natural gas rate changes in the past 15 years, Arizona Chemicals closing up shop and a high turnover rate in the city clerk’s position.

City Clerk Amber Hinton said the losses have to do with the utility services provided by the city, including water, sewer and natural gas. A recent agreement turned over the city’s sewer system to the Pearl River County Utility Authority.

Interim City Manager Harvey Miller said prior to Hurricane Katrina Arizona Chemicals was providing the city with about $77,000 a month in natural gas purchases. Those profits helped to stave off the need for rate increases, Hinton said. During that time the utility fund helped to support the general fund with about $500,000 to $600,000 in utility department profits and also helped eliminate the need for a millage increase. Currently the city has no large industrial gas customers.

Now that department is working at a loss, a loss of $1,033,568 for the 2005-2006 fiscal year, according to the audit. With rising natural gas prices and no rate increases, until recently, Hinton estimates those loses may be more once audits for the following fiscal years are conducted. The price of gas has increased about 34 percent from February to May, Miller said.

At the last city council meeting Hinton presented rate increases on water and natural gas. Miller said while the increase is not popular, it is necessary.

“We’re not in the business of giving anything away,” Miller said.

“That’s just being fiscally responsible,” Hinton said.

Mayor Greg Mitchell suspects that gas line leaks would be part of the losses.

“Really it’s a mystery how this system is off like it is,” Mitchell said.

One reason the losses have not been corrected is the high turnover rate in the city clerks office. Miller said with city clerks leaving for better opportunities and higher pay there had not been enough time to correct deficits in the utility budget. Mitchell could not associate a reason for the high turnover rate in the office but speculated it could be due to pay.

“I really don’t know,” Mitchell said.

Mitchell said former city clerk Cindy Cole left for a better job with more pay while another left because the system used in Picayune was more complicated than anything she had dealt with before.

Petal City Clerk Jean Ishbee, a city which is similar in size to Picayune, said she has been city clerk for about seven years, and her office does not see a high turnover rate.

Typically utility departments break even, if not make a small profit, Miller said. Hinton said she hopes the increase in rates will begin to get the utility department to break even again, if not provide a small profit.

“We’re not where we need to be but we’re heading in the right direction,” Hinton said.

Mitchell attributes the lack of rate increases to a lack of communication between the council and past city clerks.

“No I really didn’t know it, I thought we fluctuated (the rates) by a percentage based on what it cost and what we were selling it for,” Mitchell said.

Ishbee said that while their city does not offer natural gas, their utility rates are increased every year, usually by about one dollar.

With the loss of the utility fund profits to help fund the general funds, there may be a need for a millage increase, Hinton said. No formal discussion has taken place on the matter and the final decision would fall on the city council. Millage rates have also not been increased in a long time. The last adjustment was a reduction after the city paid off a bond issue where the council voted to deduct those mills, council member Jerry Bounds said. Mitchell said the following year millage was increased two mills back where it was before the reduction.

Currently the city collects 25 and a half mills but two of those mills go to the library. The city is also paying off three bond issues, currently paid out of operating funds, Hinton said. Bond issues are typically paid with millage increases, but no increases were introduced for those bond issues. Hinton is not sure why since she was not city clerk at that time.

“If the millage rates had increased like they should have then we would be in great shape,” Bounds said.

Bounds does not know why a bond issue millage increase was not implemented.

Millage increases in Petal take place about every year, usually by about a mill, unless there are bond issues, Ishbee said. Millage rates in Petal are currently at 46.21. Millage rates in Long Beach, another city similar in size to Picayune, are at 48.98, said city clerk Becky Schruff.

Council member Donald Parker declined to comment on the lack of rate increases. Council members Anna Turnage and Leavern Guy were unavailable for comment.