2-mills tax necessary for HCWA expansions

By Monroe Roark
Times Correspondent

Several million dollars in property taxes collected each year in Henry County are earmarked for the Henry County Water Authority. This is in addition to what is collected each month from customers’ water bills.

In recent months several citizens have spoken out repeatedly about this, saying that the county should ease the tax burden on its residents by recouping some or all of the 2 mills in county property tax assigned to the HCWA. At the May 2 Board of Commissioners meeting, Bill Toney urged the board to put a referendum in place for exactly that, and before the county budget was adopted at the May 15 meeting Carl Swensson said that about $12 million more could be utilized for the county budget if this were to happen.

The problem, according to county officials, is that it can’t happen - at least not as easily as has been suggested.

During his comments at the May 2 meeting, Toney criticized HCWA executive director Lindy Farmer, whose salary is reportedly in the $300,000 range and who Toney said has not been accessible to answer questions about the HCWA. Toney produced a “Where’s Waldo”-type illustration to emphasize that point.

Commissioner Gary Barham pointed out that Toney has not attended any HCWA board meetings but continues to raise the issue at BOC meetings “because they are on television.” Farmer confirmed in an interview with the Times that Toney has neither attended an HCWA board meeting nor called his office directly to ask any questions.

The Board of Commissioners has typically listened to the HCWA-related concerns without comment, but Barham asked county attorney Patrick Jaugstetter to give an overview of the BOC’s relationship with the HCWA and he did so during the May 2 meeting.

The commissioners appoint the members of the Water Authority’s board but that is where their influence ends, Jagustetter said. As for the 2-mill tax, he said it is part of a long-term bond indebtedness going back many years, and that indebtedness is probably in the tens of millions of dollars.

The county is contractually bound to extend the tax as long as the debt is outstanding, Jaugstetter said. “To unwind it would be a long, complicated process.”

The tax has been compared at times to the 1-mill tax formerly collected on behalf of Henry Medical Center, but that money was for operations - particularly to subsidize indigent care at the hospital. When Piedmont Health-care acquired the hospital several years ago it became unnecessary to collect the tax, and eventually the Board of Commissioners voted to end it. That kind of flexibility does not exist with the HCWA arrangement, Jaugstetter said.

“It would require an undoing of a long series of loan obligations,” he said. “That would be an enormously difficult, if not impossible, task.”

In response to an inquiry by the Times, the HCWA provided more detailed information about these issues. The 2-mill tax was originated in 1968 with an amendment to the state legislative act passed in 1961 that created the authority. That 1968 constitutional amendment was extended in 1983 by the Georgia General Assembly.

The tax “was necessary for the HCWA to be able to pursue bond issues to secure funding for the development and extension of necessary water and sewer infrastructure throughout Henry County, to serve existing and future residents and businesses,” according to a statement released by the HCWA.

These funds are pledged to pay for the HCWA’s outstanding senior lien bond debt, which totals about $107 million, through the year 2030. The authority also carries $50 million in junior lien bonds and another $46 million in GEFA loans.

The 2-mill tax has created a significant savings for HCWA ratepayers because it allows the authority to receive a higher bond rating, resulting in reduced interest rates on its bonds – the primary source of long-term debt,” according to officials.

Financial advisors have estimated that, without the 2 mills, HCWA customers would see rates increased about 25 percent for the same level of services they are now receiving. Officials said the tax also helps the HCWA in its role facilitating economic and industrial development as well as addressing environmental and public health concerns.

According to 2017 figures, about 16.5 percent of the HCWA’s overall revenue comes from the 2-mill tax, which in the past year has accounted for $12.7 million to apply to the $22 million or so in annual debt service.

The authority has over $900 million worth of anticipated capital improvements planned over the next 30 years.

Earlier this year the HCWA received a number of awards from its peers at an annual industry gathering, and the organization has routinely been praised for its ongoing operations as well as it long-range planning dating back three decades or more. The HCWA has not suffered the effects of Henry County’s explosive growth in the way that other county agencies have, and right now the county could go about 18 months without rainfall without depleting the its water supply.