That Gwinnett County's homeowners and businesses are using less water is a doubled-edged sword.

It's a good thing for efforts to combat the drought.

But it's a bad thing for the Gwinnett water system's bottom line.

Water system revenues fell 3 percent in the first four months of 2008 over the same period last year, said Pete Frank, deputy director for business services at the Gwinnett County Department of Water Resources.

The $1.9 million drop — to $60.2 million from 2007's $62.1 million — may not sound like a lot for an organization with a $206 million annual budget. But it's a shock for a system that has been used to 5 percent to 10 percent growth rates for years.

Of course, it could have been worse.

Had the County Commission not approved a rate plan that calls for annual 5 percent rate increases beginning in 2005, before the drought worsened to historic proportions, the water system's budget would be in danger territory with significant cuts or rate hikes likely, Frank said. That money had been intended to pay for growth-related expenses. But with the housing market in the doldrums and the economy slowing, growth is off and the revenues have helped minimize the drought's effects on revenues.

"At this point we're doing okay, but obviously we have some concerns about what will happen over the dry summer months," he said.

While state officials have dropped a mandate to cut water use by 10 percent over the previous year and county officials have slightly loosened Gwinnett restrictions last month to match the state's, the drought is not over.

In fact, the latest drought forecast by state climatologist David Stooksbury predicts that even normal rainfall amounts and weather patterns this summer would result in a worsening of drought conditions across the state.

Should revenue declines for the year begin sliding into the 8 percent to 10 percent range, water system officials would likely need to look at cutting costs or further raising rates to make up the difference, Frank said.

The system gets no tax revenue from the county and must pay for its operations and capital projects out of revenues collected from water customers.

Most of the system's costs are fixed, such as operating its plants and buying chemicals to treat water.

Cuts would most likely come from deferring maintenance, such as a pending project to hire contractors to inspect commercial water meters and switch out defective ones.

Some capital projects could also be put off, Frank said. One such project is a proposal to stop shipping some south Gwinnett wastewater to DeKalb County for treatment and instead either build a new plant or divert the flow to an existing one.

Frank also alluded to other "hard decisions," that county officials might have to make about the water system should revenues continue to fall drastically. But he declined to discuss what those might be.

Frank said water system officials have no idea what the summer will hold.

"We've never gone into a summer under level four drought restrictions. We've never seen anything like this," he said.

A bigger issue may be a culture of conservation Frank said appears to be taking hold among water users after years of drought education, as well as the county's slowing growth.

This month, Fulton County officials raised water rates by 15 percent to help offset drought-related revenue losses.