Cobb water rates wouldn’t need to rise for the next five years if the county stopped using water revenues to pad its budget, according to the water department director.
But that’s not the only issue putting upward pressure on water rates.
With record rainfall in Cobb County this year, water customers have been using far less water to irrigate their lawns, shrubs, flowers and vegetable gardens. That has created an $800,000 shortfall in revenues through July of this year.
On top of that, the county will transfer $17.2 million from its water department to its general fund, which pays for most county services, under a $817 million budget adopted Tuesday that takes effect Oct. 1.
The transfer is about $47,000 more than last year and the amount has trended upward since the budgeting practice began in 1998 as an effort to keep property taxes low and avoid cutting services.
Critics of the budget transfers have said it can cause water rates to jump because the utility is left trying to make up for the losses.
And water rates could go up in January, said Steve McCullers, the county’s water department director, but that would have to be approved by the Board of Commissioners.
McCullers says the commission tells him how much the transfer is going to be on a yearly basis, and he creates an alternate rate schedule to accommodate it.
Transfers are the decision of county commissioners, not the water department.
“If they eliminated the transfer completely we could go at least five years with the current rates assuming we have the same level of service,” McCullers said.
Since the commissioners started siphoning water revenues in 1998, residents have seen their rates increase by 59 percent or $23 per month.
About $225 million has been moved from the water utility to the county’s general fund since in 1998.
How the practice started
County commissioners can take up to 10 percent of the water department’s revenue. That rule comes from a $4 million bond issued in 1988 by the water department to fund improvements to the Sutton and Noonday Creek treatment plants.
But the bond was later refinanced to get a lower interest rate and the county’s lender inserted a provision that allowed a transfer of funds up to 10 percent from the water department. Prior to that refinancing the transfer had not been allowed under the bond.
Under the budget adopted earlier this week, Cobb will take 8 percent, less than the maximum allowed. Budget discussions started with county Chairman Tim Lee recommending about an $18.2 million transfer, which would have been $1 million more than taken last year, but that number fell to $17.2 million before the budget was adopted.
Some say it still hasn’t dropped enough.
Bob Ott, who represents southeast Cobb, voted against the budget, citing the water revenue transfers as the main sticking point. He says there are typically two ways that a government balances its budget: cutting expenses or increasing property taxes.
Property taxes make up 55 percent of the county’s budget.
Lee, who proposed the budget, said it is a well-rounded option that takes revenue from multiple sources.
“I’m not saying the only two options are transfer the water system money or cut expenses,” Ott said. “You have to decide if those are (the expenses Lee) thinks we absolutely need, he needs to have the millage increased or find a true additional source.”
Ott says the revenue is coming from the same people — those who pay both water bills and property taxes — but has just been moved to a different bill.
Lee touts the millage rate decrease in the budget which lowered property taxes $14 for a $200,000 home and $38 for a $500,000 home. That’s still not the rates homeowners paid in 2011 before the millage rate was increased, though.
Ott has been critical of the budget and cast the lone vote against it earlier this week.
“We’re out there saying we’re lowering the millage yet we’re continuing to transfer water funds,” Ott said.
Commissioner JoAnn Birrell, representing northeast Cobb, also found fault with the process. She asked the county to present a plan to lower the transfer over time. No such plan has been brought forward but when the transfer was lowered from $18.2 million to $17.2 million, Birrell voted for the budget saying she felt comfortable coming down to 8 percent instead of the 10 percent maximum.
Dr. Bill Hudson, a retired dentist in east Cobb, wants to see the water rates lowered and said the county can’t turn down money despite the consequences.
Hudson compared the water transfer to grants the county applies for and receives from various state and federal agencies. The county is addicted to grants like “crack cocaine,” Hudson said, that sometimes have strings attached.
“They’re able to get this money from the water department and they can’t say no,” he said.
J.D. Van Brink, chairman of the Marietta-based Georgia Tea Party, wants the county to make the process more transparent.
“The problem, of course, is when you get your water bill you don’t see how much of the bill is going toward the general fund,” said Van Brink, who lives in Acworth. “It’s embedded in the cost of your water.”
Water woes multifaceted
McCullers, the water department director, said the utility was about $800,000 short in revenue at the end of July compared to where it was that time last year. He pointed to the rainy summer as a large cause of the decline in revenue.
But the reason rates could increase in January is more than just the county’s transfer and too many rainy days. Power costs are increasing. Regulations are becoming more expensive. The Cobb County-Marietta Water Authority, the wholesaler the county buys water from, spent $30 million at the Hugh A. Wyckoff Water Treatment Plant coming into compliance with a regulation regarding byproducts created when water is disinfected. That cost was passed along to consumers like the Cobb water department.
Glenn Page, general manager of the authority, will ask his board this week to approve raising rates 4 percent. That cost will be passed along to the county water department and, in turn, its customers in Cobb.
Cobb not alone in transfers
Cobb isn’t the only local government in Georgia that transfers money from its water department to its general fund.
“There are many reasons why a city would transfer money to the general fund,” said Aileen Harris, spokeswoman for the Georgia Municipal Association.
It could be to reimburse the county for money spent on infrastructure or, like in Cobb’s case, to keep property taxes lower.
The city of Smyrna transferred more than $1.5 million over its last fiscal year that ended July 30.
Marietta, too, takes cash from its Board of Lights and Water. The $11.5 million transferred from the Board of Lights and Water to the city’s general fund is split between the electric, water and sewer utilities the board oversees, said Bob Lewis, the utility’s general manager.
Marietta also uses utility transfers as a method of keeping property taxes down without having to sacrifice services.
“The city looks at it as a return on investment,” Lewis said.