Transfer of money to general fund linked to rising water rates
by Nikki Wiley
September 15, 2013 12:19 AM | 3946 views | 8 8 comments | 24 24 recommendations | email to a friend | print
Charlotte Leiter, 6, left, and her twin sister, Claire, make a mad dash through cold sprinkler water after school Thursday on a 90-plus degree day in Marietta. The Cobb water department is facing an $800,000 shortfall in revenues, plus the transfer of $17.2 million to the general fund.<br>Staff/Jeff Stanton
Charlotte Leiter, 6, left, and her twin sister, Claire, make a mad dash through cold sprinkler water after school Thursday on a 90-plus degree day in Marietta. The Cobb water department is facing an $800,000 shortfall in revenues, plus the transfer of $17.2 million to the general fund.
Staff/Jeff Stanton
MARIETTA — A favorite maneuver by Cobb County is to take revenues paid by water customers and shift them to the general fund, a tactic that critics say will eventually leave the water department high and dry with no choice but to raise rates.

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.

Ott disagrees.

“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.

Comments-icon Post a Comment
It has come to light
September 16, 2013
All these years the Byrne, Olens, and Hankerson have bragged on what great managers they were, when they had a slush (water/streetlight) fund to secretly draw from. They have ridden our backs as citizens for years and took bragging rights. Bill "The un-real deal" Byrne touts, a triple A bond rating, new paid for in cash buildings and always a budget that was in the black; Sam "The copycat" Olens, or "Lil Bill" the same thing, and let's not forget David, “Everybody wants me cause I save so much money", Hankerson. $225 million since 1998 averages out to $15 a year minimum for their, “Slush funds". I am not for Byrne or Gorham, and hope a credible candidate, not Byrne, runs against her also. Maybe while the two of them fight, he or she could walk right in.
Cobb taxpayer
September 15, 2013
After transferring $17.2 million from the water department to the general fund, we are going to be asked to pay more for water?

The county should stop this practice. With elections coming up next year, any commissioner that does not support stopping the transfer should be voted out.
Faithful Reader
September 15, 2013
Many news stories can be slanted by putting on another page, near the end of the article, the facts the writer or editors don't want to be noticed. Once again it was done here about Cobb not being alone in this practice. Having lived around the country due to job transfers, let me assure you it has been the norm in most municipalities where I have lived. Why don't your reporters dig deeper for facts instead of opinions from the same people. For sure, Mr. Ott doesn't lack opinions nor the desire to be in front of the press every chance he gets. I hope he flies planes better than he governs.
Acworth Pat
September 15, 2013
Cobb County used to be a good place to live. However, recently, Cobb is using tactics you see regulary in places like Fulton County and City of Atlanta. Perhaps it is time to move on.
Hank Moody
September 15, 2013
Here is a Bobby Ott time line:

1. He had a year to review the budget.

2. Leading up to the budget he didn't bring forth any recommendations to improve the budget.

3. He voted against the budget.

4. Now he is advocating for a tax increase...

And you all think he is some sort of savior....I would call him a media hound. All Ott does is stand in the way of anything. I challenge any of you to tell me one positive thing this double dipping pilot has done as Commissioner...
Come on...
September 16, 2013
1.You don't have a year to review the budget.

2.The chair and hankerson keep the budget a secret until they are ready for input. (Usually a month or so befor voting)

3.The chairman dosen't want recommendations.

4. I believe he said that is basically what the result is when you have the citizens pay back what was borrowed. He is not advocating an increase. Don't lower the millage rate then give raises and spend money on projects only to have to get the money from "Peter to pay Paul". Call it what you want, but it is a tax increase. Unfortunately sometimes a tax increase is necessary, but make it known. Don't try to hide it by "Robbing Peter to pay Paul".(Tax Increase)
SW Gal
September 16, 2013
Thanks, MDJ, for covering the story behind "robbing the water fund." We already know that Cobb County will need to modernize the water infrastructure in the near future (new pipes, machinery, etc.) It would be more responsible for the commissioners to hold any water funds to pay for that. Instead, they keep doing the same old "shell game"... move the money so that the uninformed voters do not realize it is another form of raising taxes. Stop robbing the water fund (even if other counties commit this theft.) Instead, STOP accepting Federal funds such as "Complete Streets" and "livable Centers Initiative," which force us to pay for things that are either "nice to haves" or totally UNNECESSARY. You are telling us that "concrete bunkers" in the middle of Lower Roswell and Piedmont and 120 and sidewalks to nowhere should take our tax dollars (a local 50/50 match with Federal tax dollars, also our money.) STOP the insanity, Commissioners! All of you who voted for this scam need to be ejected in the next election. You are ruining our county.
3 dollars a month
September 15, 2013
The city of Marietta takes a much larger share than the county in electric rates. But this is a common practice most governments do since they save money in the end verses a private profit making business. But its funny to watch these tea party folks get in such a fit over 3 dollars a month while at the same time trying to deny Georgians heath insurance.
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