Water rates keep inching up as water department.keeps giving to general fund
by Nikki Wiley
September 05, 2013 12:36 AM | 2746 views | 4 4 comments | 10 10 recommendations | email to a friend | print
MARIETTA — Cobb County has shifted more than $225 million in water utility revenues to its general fund since 1998, a practice that some commissioners say needs to stop.

The transfer of money from the water department has helped keep property taxes down, but it could be at least part of the reason why water rates have been rising.

An investigation by the MDJ shows that water rates have jumped almost $23, or 59 percent, over the same 15-year period in which the county has been subsidizing its general fund with revenue from the water fund.

That 59 percent increase is based on the average use by a Cobb household of 6,000 gallons a month on the combined bill for water and sewer service. Water rates did not increase over the last year but they have edged up over time.

Cobb Chairman Tim Lee says the controversial transfer of water funds is intended to keep property taxes low, but Lee is eyeing other options to make sure the taxes don’t take an unexpected leap.

One of two different types of sales taxes could be targeted to reduce the county’s dependence on water funds.

Under Lee’s proposed $816.7 million budget, set for adoption Tuesday, the county would take $18.2 million from the water fund to pad the general fund budget, or about a $1 million more than was transferred last year. The general fund pays for most county services.

Critics say it leaves the water department scrambling to make up for the lost revenue and could force another increase in water rates.

Commissioners Bob Ott and JoAnn Birrell, who represent southeast and northeast Cobb, respectively, have voiced their opposition to what has become a common budgeting practice.

But Commissioner Helen Goreham, who represents northwest Cobb, defended the transfers.

“It’s an acceptable legal practice and what it does is help to keep our property taxes low because what it does is make up a (budget) shortfall of $21 million,” Goreham said.

She says it “serves a purpose at this point” and Cobb has one of the lowest water rate structures in the state. Some residents have told her they like the transfers, Goreham said, because they don’t want to take a chance that property taxes could increase.

Until she sees an alternative that doesn’t negatively impact residents, she’s OK with the transfers.

Lance Lamberton, chairman of the Cobb County Taxpayers Association, says it’s the wrong answer.

“People who pay their water bill should be charged just for the water bill service,” Lamberton said.

He wants to see the county’s dependence decreased over time and says the only sustainable option is to reduce the amount of government spending.

“They need to be far less generous with the services they provide,” Lamberton said.

Another tax could be in store for Cobb

Some Georgia counties are turning to a local option sales tax, called LOST, created in the early 1980s to keep property taxes low. The 1 percent sales tax is approved by voters in a referendum and money raised provides for a tax rollback on several kinds of property including industrial, agricultural and commercial.

Lee is looking toward a newer option created in 1995. The HOST, which stands for homestead option sales tax, takes a different approach by focusing on rolling back taxes for primary residential properties. It’s also a 1 percent tax on purchases.

The proposal was a campaign promise Lee made during his re-election run last summer. He said at that time commissioners would vote this fall to request local legislation in the 2014 General Assembly. If both of those are approved, county voters would decide the issue in November 2014.

So far, the issue hasn’t been brought before the commission.

“It’s important to keep all taxes as low as possible so that taxpayers can keep more of their money and to keep Cobb County competitive for positive economic development growth,” Lee said Wednesday in an email.

Property taxes make up about 55 percent of the county’s budget. Lee says having a “small but effective” budget is a top priority.

Lee says he’s still studying both sales tax options but is leaning toward the HOST.

Goreham isn’t sure that a HOST would make up the $21 million deficit the county budget faces.

“I think it’s very easy to take a position without having to provide a solution,” Goreham said.

She wants to know if the sales tax would solve the county’s problem and how much cash it would bring in.

The special purpose local option sales tax Cobb has in place now brings in about $130 million annually, said Jim Pehrson, county finance director.

Under a LOST, all money raised must go directly toward rolling back taxes. About 20 percent of the money raised under a HOST can go to capital improvements, but can’t fund operations. That means it would have to be used to purchase equipment and couldn’t be given to salaries or program improvements.

It’s an idea Lamberton, of the Taxpayer’s Association, could get behind. He still wants more information but says, in general, he’s supportive of a consumption tax over property taxes.

“That promotes savings and investment,” Lamberton said.

Both taxes would mean increasing the county’s sales tax from 6 percent to 7 percent. Purchases in Cobb are taxed now at 6 percent with 4 percent going to the state, 1 percent to the county’s special purpose local option sales tax and another 1 percent going toward a SPLOST dedicated to education.

Both LOST and HOST programs have to be approved by county voters in a referendum but HOST, the tax Lee supports, takes it a step further by requiring approval by the state Legislature.

If a county opts into HOST, the revenue goes toward property taxes in the county. There’s no requirement to share the money with cities inside the county, but counties can choose to split the cash.

LOST programs require counties and cities to work out how they will distribute funds among themselves every 10 years, leading to sometimes bitter debates and court battles.

Marietta Mayor Steve Tumlin says he could support a LOST.

“Most cities that I know, they work well, they argue every 10 years, but they always work it out,” Tumlin said. “I don’t have any problem with a LOST if that’s what we decide to do.”

He’s not sure why it hasn’t been implemented before, but when it comes to a HOST, Tumlin says he isn’t knowledgeable enough to make a proper opinion but is open to researching the idea.

Property tax rollbacks popular statewide

Cobb is one of three Georgia counties that has neither a LOST nor a HOST.

Cherokee and Gwinnett counties are the other two counties that don’t have one of the programs in place. Cherokee placed a HOST on the ballot last year but the referendum failed.

Rockdale and DeKalb counties have a HOST.

It’s a popular political move, said Clint Mueller, legislative director for the Association of County Commissioners of Georgia.

“A lot of people think a sales tax is a fair type of tax. It spreads the burden,” Mueller said.

Because state law says counties can’t have both types of sales taxes in place and HOST is the younger of the two options, most counties have a LOST.

“They really didn’t have an option,” Mueller said.

The only way to get rid of the tax is for voters to approve removing it.

Still, he says a HOST is a wise option because “it’s supposed to be a dollar for dollar replacement.”

“You get more bang for your buck with a HOST for a homeowner,” Mueller said.

Comments
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CobbVoter
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September 11, 2013
The real issue here they are decreasing costs for those who own expense property by distributing the cost evenly across every gallon of water. If you are a single male in a 350K you saved a fortune while the Family of 3 in an 80k house is now paying a higher water bill to keep a lower mil rate.

Remember this point at the polls, I'm all for capitalism. Don't distribute the wealth or the debt. Especially while pulling the wool over the public eye.
ALLWET
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September 05, 2013
The City of Smyrna has been doing the same thing for YEARS and even worse regarding water rates. It also takes the percent increase from the county that it pays wholesale and passes it on to its residents as the same percent RETAIL. As an example if Smyrna pays a 5% increase on a dollar to the county it pays $1.05. The mayor and council then announce they are passing this 5% along but, wait....the retail rate is already higher. Lets say it is $2.00 for the same amount of water. And, 5% of $2 is not a nickel but a dime!!! Max Bacon and his merry band have been doubling down on residents for YEARS making water rates unnecessarily high to increase the transfer to the general fund. I suspect they are not the only Cobb cities to use this shell game.
T for TAX
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September 05, 2013
Tim Lee - TAKING MONEY FROM THE WATER DEPARTMENT IS A TAX to everyone who uses water. The Water Department will raise our rates in order to balance their budget. You sir have a 22 million dollar deficit, you have done nothing except threaten to take everything away from residents - parks, rec. not mowing medians, reduction of police and fire personnel and on and on - you say that we have a strong budget and that you have a balanced budget without raising our taxes - you sir do not have a balanced budget, you are continuing to raise our taxes thought the water department. You call it a transfer It is a TAX! YOU think you deserve the raise that you so humbly say you will not take! Then why did you put it in the budget?
FROM TEXAS
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September 05, 2013
This is county racketeering plain and simple if Lockheed Martin was doing business that way then there would be an investigation. This is conversion and theft on funds committed against the taxpayer. This is an illegal practice that has gone on for a while and has become and easy slush fund just like the ongoing SPLOST we need a budget for the county and every time someone brings this up he’s a bad guy.
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