The Board of Mayor and Aldermen will begin the new year examining where to wield the budget ax as it determines a way to fund a proposed $16.1 million capital improvements project, pay off an existing $18.5 million debt, and pay for a possible $20 million to $40 million sports complex without raising taxes.

“In politics, this is where we say the rubber’s going to meet the road,” Mayor George Flaggs Jr. said     Monday at a meeting of the board.

“Going forward, starting Jan. 1, we’re going to earn our money as leaders in Mississippi,” he said at Monday’s meeting of the board. “We have some tough decisions ahead.”

Some of the discussion begins before the end of this month. Flaggs said the capital improvements and budget oversight committees will meet Friday to examine financing the proposed capital improvements plan and the possible sports complex, and funding and a proposed $25 million utilities improvements project which will be paid through the city’s utilities budget.

The board will meet Monday to discuss the effect of the capital improvements project and personnel costs on the current budget, and the ad hoc committee on recreation’s report. The recreation committee is expected to present its report to the board at a public meeting at 5:30 p.m. today.

Monday Flaggs discussed the city’s outstanding $18.5 million debt and borrowing up to $17.5 million for the capital improvements project. The $18.5 million debt will be paid off by 2018.

“If you’re talking about a $20 million sports complex and a $25 million utilities improvement and a $16.1 million capital improvements, you’re talking about $61 million,” he said. “Our debt limit is $48 million. If you want to finance (the projects) today, the bond market is about 3.25 (percent interest rate).”

To pay off the current debt, plus borrow the additional $17.5 million, Flaggs said, it would cost the city $2.62 million for the current fiscal year. In 2016, he said, it would cost the city $3.2 million, and $3.82 million in 2017 without raising taxes.

That initial capital improvements bond note, he said, has to be considered in the city’s current budget, where about 68 percent of the money goes to cover personnel. The board in September passed a $32 million budget that included $3.2 million in “one-time money,” that was dedicated to complete certain projects during the current fiscal year. If the one-time funds are subtracted from the total budget, the city’s fiscal 2015 budget totals $29.15 million.

“You have not reduced the number of employees, you have not reduced benefits,” he said.

“Out of that budget structure, you cannot afford to take on this debt going forward, excluding the sports complex, without being very, very conservative on your spending. Your biggest cost is in personnel. Unless you’re ready to reduce some employees, reduce some benefits, you won’t be able to afford the $2.62 million (payment) for capital improvements on $17.5 million.

He said after the meeting he was not advocating reducing city employees or cutting benefits, adding he wants to see the work force reduced by attrition, where vacancies are not filled. He added he believes more cuts can be made in the current budget.

“There’s still fat in the budget,” he said after the meeting. “I believe I can cut another $1.5 million out.”

Flaggs added he has some ideas how to fund a sports complex.

“I’ve got two options in mind, without going into details,” he said. “It depends on whether the Warren County Board of Supervisors will join in with us on this sports complex or if we have to go it alone. I think we can get to where we need to go with or without them. The city has to move forward. Vicksburg has to move forward.”