Updated 11:44 a.m.
The MI-Connection communications system has delivered its 2010-11 budget to the towns of Mooresville and Davidson and scheduled a May 27 public hearing on the proposal.

As presented to the towns, which own the system, the plan includes two scenarios: a “base” plan that would require a $6.5 million subsidy from the towns and a so-called “community” budget with more aggressive growth targets that would reduce the subsidy by about $649,000.

Davidson and Mooresville officials will use the numbers as they plan their own budgets. Ownership of the system is divided according to the number of customers in each town, currently 31.25 percent for Davidson and 68.75 for Mooresville. That puts Davidson’s share at up to $2,018,641, and Mooresville’s at up to $4,441,010.

The cash infusions would be lower if the towns’ boards both agreed that the more aggressive growth projections were achievable. Davidson’s share would be $1,815,812 under the more aggressive scenario, Mooresville’s $3,994,787.

A $2 million payment would be a hefty share of Davidson’s budget of about $7 million. Mooresville’s budget is about $42 million.

The base budget projects a loss for 2010-11 of $4.8 million, which would be 32 percent below this year’s anticipated loss of $7.1 million. Excluding interest, depreciation and amortization, the system would have a positive cash flow (known as EBIDA) of $3.4 million under the “base” budget. That would be a 245 percent jump from this year, when the system is expected to have EBIDA of $986,399.

The budget summary released Friday by MI-Connection adds details to what the board heard at its meeting on May 7. (See May 7, 2010, “Towns get their 2010-11 cable bill: $6.4 million.”)

TWO SCENARIOS

MI-Connection’s “base” budget assumes 19.9 percent revenue growth in the fiscal year beginning July 1, through the addition of 2,499 new individual services (known as revenue generating units, or RGUs), primarily new phone and internet lines. Some MI-Connection board members have characterized that plan as “aggressive” and it’s significantly higher than the system’s recent experience.

“It is our belief that this budget is realistic and attainable based on current market conditions and trends,” MI-Connection General Manager Alan Hall said in a message accompanying the budget summary.

The “community” budget envisions even more aggressive growth – 38.7 percent – and assumes that the two communities will succeed in an all-out campaign to persuade residents and businesses to switch to MI-Connection. That plan foresees nearly 10,000 new RGUs, 1,000 of which would come from business customers.

“It will take a total community effort, not just increased marketing, to make this happen,” Mr. Hall said in his statement, referring to the second budget proposal.

The more aggressive budget also comes with a bigger projection for capital spending – $3.8 million vs. $2.6 million. Both scenarios also include $7.3 million in debt payments in the coming year, a leap from the current year because the towns now must make principal payments on the money they’ve borrowed to buy and upgrade the system over the past 3 years.

TOWN BUDGETS NEXT

Davidson Town Manager Leamon Brice will present his proposed budget to the Town Board at its monthly meeting Tuesday, May 18, at 6 p.m. at Town Hall, 216 S. Main St. The meeting had been pushed back a week to give Mr. Brice and finance chief Eric Hardy time to absorb MI-Connection’s request.

Mr. Brice and other town officials have not yet disclosed how they will come up with the Davidson’s $2 million share of the fiscal 2011 subsidy. (See May 12, 2010, “How will town pay $2m cable bill? Answer due Tuesday.”)

Mooresville’s Town Board will get its first look at the budget during its meeting Monday, May 17, at 6 p.m. at Mooresville Town Hall, 413 N. Main St. The board also is expected to discuss budget goals for the coming year and set a date for its annual budget public hearing. See the agenda on the Mooresville town website. Meanwhile Mooresville’s finance director says the board has schedule budget workshops on Tuesday and Wednesday, May 18-19.

PUBLIC HEARING MAY 27, 7:30 AM

The MI-Connection board, composed of appointed citizens from the two towns, will hold the public hearing during its regular monthly meeting next Thursday, May 27, at 7:30 a.m. at the MI-Connection office 420 S. Academy St., Mooresville. The hearing is open to the public.

DOCUMENTS

2010-11 budget summary for MI-Connection – 1 page PDF.

General Manager Alan Hall’s overview statement about the budget – 1 page PDF.