City officials at a Monday budget workshop discussed possibly increasing Picayune’s tax millage to provide more revenue for the city’s budget.

They also discussed ways to avoid raising the millage rate. Three previous bond issues failed to be funded as they should have been with millage adjustments, causing the city some budget woes today.

Apparently, when bond issues were approved by the city in 2004, 2005 and 2006, millage was not adjusted to help fund them, city accountant Amber Hinton said.

Council member Jerry Bounds asked what the proper procedure should have been when bond issues were approved.

Financial consultant Priscilla Daniels said the general procedure involved in adopting a bond involves the city adjusting the millage to make the payments on the bond. The city clerk would then present the adjustments needed to make the payments to the council in budget workshop. Bounds asked if those adjustments were ever presented to the council. Neither Hinton nor Daniels could answer that question since they were not employed with the city at that time.

To generate the revenue to pay for those bonds, an additional six to seven mills would be needed, Hinton said. None of the city officials found that option to be popular. They attempted to find alternative routes to generate the revenue. Council member Leavern Guy asked about sales tax revenue. He said he thought sales tax collection estimations for the next fiscal year were too low. He suggested Hinton and Daniels look at increasing the proposed sales tax revenue and if that collection came up short cuts could be made in the budget later in the year.

Hinton said sales tax collections appeared to be leveling off and to anticipate more than her calculations could cause the city to default on payments of their bonds.

Mayor Greg Mitchell said the city could sell off the bond they collect on from Farmer Fresh Produce. The city collects about $50,000 a year in payments from Farmer Fresh Produce on the property they operate on in the Industrial Park. Mitchell suggested a way, if legal, that the city could sell off the loan to a bank. He said he has already talked to some banks about it.

Hinton said that option would lead to the city paying the difference for the higher interest rate. Currently, the city is collecting 2 percent interest on their loan to Farmer Fresh Produce. If the loan was sold to a bank, it would be likely to charge 6 percent interest. Hinton said the city would have to pay that estimated 4 percent difference in interest to the bank.

The utility budget was also discussed at the workshop. The discussion concerned the gas and water rate increases approved early this year. Those increases will be reflected on August utility bills, Hinton said. That rate increase should help fund the utility department, which reflected a $1 million shortfall in fiscal year 2005-2006.

On a separate topic dealing with utility problems, the city has to catch up with collecting bills for a few previous months. A problem with the billing software kept residents from receiving utility bills for those months. Apparently, the data extracted from the software used by Meter Reading Specialists had errors in it. Hinton said that issue has been resolved and the city will work with residents to catch up on payments.