Increasing construction costs are forcing the Board of Mayor and Aldermen to re-evaluate the priorities for the city’s capital improvements program.

The board is borrowing $9.8 million in general obligation bonds to perform projects ranging from street paving to renovating City Hall and upgrading recreation facilities. Mayor George Flaggs Jr. said the funds are supposed to be in the city’s account by mid-August.

The money is expected to fund the first part of an ambitious two-phase program to make necessary repairs to city buildings and infrastructure, but Flaggs said escalating construction costs are going to force the board to take another look at the plan.

“We’ve still got time to go back and revise (the priority list),” he said. “We have enough flexibility in there (the bond issue) to do that. The construction costs are way over.”

He said the recent estimate to repave Martin Luther King Jr. Boulevard, one of the streets to be resurfaced, was placed at more than $1 million.

City Attorney Nancy Thomas said the total estimate for resurfacing Martin Luther King and Mission 66 is $1.5 million, adding, “We only allocated $1 million for the first stage, so we ‘re just not going to pave as many streets as planned.”

Flagg said estimates for new pavilions at City Park and the Vicksburg Farmers’ Market at the corner of Jackson and Washington streets, are running over the money allocated for the projects. The board dedicated $350,000 for a new City Park pavilion and $550,000 for the farmers’ market.

Flaggs also warned the Aldermen Michael Mayfield and Willis Thompson the 2016 general fund budget could be tight.

The board is expected to begin budget hearings in August. The city has other infrastructure problems that are not included in the bond issue that must be addressed through the general fund, and the mayor has said the city could pay for the bond issue without raising taxes.

“We don’t have potholes, but we’ve got a lot more lines are breaking; we’ve got more waterlines breaking down than ever before because of older infrastructure,” he said.

“Construction costs are going up, and sales tax revenue isn’t keeping the same pace.

“This is going to be a critical budget year, because the next budget year is the budget you’re going to have to defend in an election year,” he said.

“You’d better be careful, because you can set yourself up for a tax increase in an election year.”

He said the city will finish out fiscal 2015, which ends Sept. 30, because property tax collections are $200,000 over budget. But the 2017 budget could be a challenge.

“This year’s budget and next year’s are going to be very tough,” Flaggs said. “I would rather be much more conservative this year than run the risk (of a tax increase or layoffs in fiscal 2017). We have to be very fiscally responsible.”