KIMBALL, Tenn. — The city's unique plan to resolve its sewer fund deficit has received state approval.
It is likely, however, that the state Legislature will intervene soon to close the loophole Kimball found, officials said.
In July 2012, the Kimball Board of Mayor and Aldermen approved a plan that created an $800 monthly sewer surcharge for each of the city's six buildings to help keep the sewer fund from losing money.
"We'd been in the red for the past two years, and we knew we were going to get a nice little letter from the state," Mayor David Jackson said in September. "We did, so we passed this ordinance [as an answer to the problem]."
The plan worked, and during the last fiscal year, Kimball's sewer fund showed a profit.
The city's strategy also caught the attention of the Tennessee Comptroller of the Treasury's Water & Wastewater Financing Board, which spent the past several months wrangling over the legality of the move.
Paul Johnson, with accounting firm Johnson, Murphey and Wright in Chattanooga, said Kimball received a letter on Nov. 18 confirming that the state board voted to "accept the actions of the town."
"I think they couldn't do anything else, but it was nice to get this letter and acknowledge the fact that they have accepted what we're doing as an acceptable practice," he said.
"The one weak spot in the financial statements of the town has been corrected, so I'm just thrilled to death," Johnson said.
Jackson said the state makes municipalities set sewer rates so they won't lose money.
If city leaders hadn't found another way to solve the deficit problem, officials said they would have been forced to raise rates on residents.
"The economy has been down, and we thought what we did was a better thing to do to protect the citizens of the town," Jackson said.
He indicated there's been talk that the Legislature will bring up Kimball's plan in the upcoming session to "cover this loophole."
"We would be grandfathered in [if there is a change]," Jackson said.
Ryan Lewis is based in Marion County. Contact him at ryan firstname.lastname@example.org.