Cobb County skimming $20 million from water revenue

Water customers told the money “dedicated” to public safety

About 173,000 Cobb County water customers received an unusual message on their November bills — the county government will skim 10 percent of water department revenues next year and dedicate the money to public safety.

The $20 million transfer is nothing new in Cobb County, which has been using water revenues to bolster its general fund budget since at least 1998. But this is the first time that customers have been notified about the practice on bills, and the first time the county has claimed the money is dedicated for a specific purpose.

Critics call the transfers a hidden tax, because they are often accompanied by a corresponding water-rate increases. And they say this year’s message is misleading because the water cash is poured into the general fund, along with property taxes and other revenues, which are used to pay for a wide array of county operations.

In addition, next year’s transfer is double the amount of new spending for the police department approved in the fiscal 2016 budget, which also funds a property tax rate reduction — fulfilling a political promise made by Commission Chairman Tim Lee, who is up for re-election next year.

“The entire water system message and content has the demeanor of performing a shady sleight-of-hand trick or even a deception by raising additional revenues to help run our county without requiring a tax increase,” said Joe O’Connor, a retired Marietta business owner and marine, who has served as an advisor and coordinator in many local, state and national political campaigns. “Shouldn’t all of our county taxes and and operating revenues be transparent and only result from true and legitimate millage rates?”

Commission Chairman Tim Lee said in an open letter emailed to residents Dec. 3 that he is “confident” the actual amount of the transfer will be less than the budgeted 10 percent. He said the message on bills is part of the county’s “ongoing commitment to enhance transparency.”

The transfer “will help fully fund a multi-year public safety plan unanimously adopted by the Board of Commissioners in 2014,” the email says.

The county had been on a path to slowly ween itself off water money, reducing the transfers by one percentage point over each of the past three years. This year’s transfer was 7 percent, or $14 million.

Snapping the transfer back to 10 percent was a major reason Commissioner Bob Ott voted against the budget. He said the message claiming the money will be used for public safety is “political cover.”

The message “is misleading because it makes it sound like all the money is going to public safety, which isn’t true,” Ott said. “I’m philosophically opposed to [the transfers] because you’re taking a commodity — water, something people can’t do without — and using the money for something other than water.”

Commissioner Lisa Cupid also voted against the budget and said she is uncomfortable with the transfers because they “disguise the true cost of water.” But Cupid said the message as political cover isn’t very effective.

“I don’t know that it sends the most positive political message,” Cupid said. “Who wants to hear that their money for water is going to support something unrelated to water, when water is an essential resource that people struggle to pay for as indicated by the number of cutoffs each month.”

Commissioner JoAnn Birrell has fought for elimination of the water transfer, but voted in favor of the budget in exchange for the message being placed on bills. Birrell, who would only answer the newspaper’s questions through email, helped write the message on bills saying the water money is dedicated to public safety, according to emails between her office and Water Director Steve McCullers.

In an email exchange with The Atlanta Journal-Constitution, Birrell acknowledged that the transfer “goes into the general fund for all departments,” and said the transfer is “legal.” She told the newspaper that the message on bills is appropriate since next year’s proposed transfer is an increase over the previous year.

“Going back to 10 percent for the 2016 budget is a three-percent” increase over this year, Birrell wrote to the AJC. “That is the portion that was to help fund public safety.”

But that’s not what the message says: “Up to 10 percent of the water system’s revenue may be transferred to Cobb County’s General Fund. For the 2016 budget, this amount is dedicated to help fund public safety.”

McCullers wrote a four-page memo to commissioners Sept. 15 saying the agency could get by next year without rate increases because of its large reserves. But he recommended against it.

“It is unfortunate that budgetary pressures have resulted in the need to return the water transfer to its maximum level,” the memo says.

“While it is true that we can get through 2016 with an increase in the water transfer and a minimal rate increase by drawing down reserves, significant increases will be required in future years to continue the transfer at a 10-percent level, offset the annual 4 percent increase from the Water Authority, fund a quality capital program (including stormwater), and address operating cost increases.”

Lee’s email to residents calls water transfers “common” in Georgia and provides examples of other municipalities that have similar policies. There is one other county on Lee’s list — Macon-Bibb County, which transferred $163,000 this year. There are also six cities on the list, half of which had relatively small transfers that amounted to less than 2.5 percent of their general fund budgets.

What’s more common in Metro Atlanta counties is transferring watershed revenue to cover the cost of services provided by the county, things such as payroll, fleet maintenance and human resources. Gwinnett, Fulton and DeKalb counties all practice that policy.

Lee’s email, which was sent before this article was written but after the newspaper requested emails and other information about the transfers, accuses the AJC of “false assertions and ongoing, ridiculous conspiracy theories.”

“Despite the AJC’s anti-suburban bias, Team Cobb will continue to work hard to provide the best services at the best possible value to Cobb County taxpayers,” the email says.

The county spokeswoman answered on behalf of McCullers when the AJC asked how long the message would be printed on bills.

“As long as necessary to fully inform the public,” she wrote in an email.