Columbia council votes to end water, sewer money transfers

A nearly two-decade-old habit of moving millions of dollars out of Columbia’s water and sewer systems to pay for other city services ends in June, City Council decided on Tuesday.

By a 5-0 vote on a proposal by Mayor Steve Benjamin that added the issue to council’s agenda, council members said all transfers will stop on June 30, the end of the fiscal year.

The decision includes a promise that ending the controversial transfers will not result in cutting public safety budgets.

This year’s city budget includes $2.6 million in water and sewer funds that are targeted for public safety, Columbia’s budget director, Missy Caughman, said.

Council, which was sued over the transfer practice, has been slowly reducing the transfers for the past three fiscal years, this year arriving at the $2.6 million mark.

Benjamin submitted his motion to end the practice to put an end to what he said has become “a political football.”

“Let’s just do it and stop fighting about it ... in the press,” Benjamin said.

Voting to stop the transfers were: Benjamin, Moe Baddourah, Sam Davis, Howard Duvall and Ed McDowell. The other council members did not attend Tuesday’s meeting.

The decision, because it will provide more money for system repairs that must be made, could be good news for water customers inside and outside the city. But it will mean City Council will have to shift money to cover city services.

The transfers date to the 1999-2000 fiscal year and totaled $78.6 million diverted through 2010. That’s a yearly average of $7 million during an 11-year period for expenses such as public relations, economic development and to support an organization that promotes the Main Street corridor, among other services not directly related to running the water or sewer systems.

The practice also prompted a lawsuit. In September, the state Supreme Court questioned Columbia’s transfer practices and warned cities that have similar spending habits.

“Simply put, the statutes do not allow these revenues to be treated as a slush fund,” the justices said in a 5-0 ruling. The justices did not ban the practice. Instead, they sent the case back to a lower court for a new ruling.

The high court’s action created anxiety in other cities about possible loss of an important source of revenue that provides income for other services and holds down property taxes.

Columbia’s sewer system is so deteriorated and has caused so much pollution that the U.S. Environmental Protection Agency got a court order in 2013 that will require the city to make upgrades within the next decade that the city estimated will cost $750 million.

The municipal water system is the city’s biggest moneymaking service. The sewer system is not as profitable because the system is more expensive to operate. However, together they are budgeted this year to produce $23 million more than they cost to operate, according to a financial report issued Tuesday by the city.

More recently, the annual transfer has amounted to $4.5 million. In fiscal 2013-2014, the transfer totaled $4.2 million, then $4 million in fiscal 2014-2015. This year, the $2,675,605 was earmarked for the police and fire departments as well as the 911 center and municipal court, Caughman said.

City manager Teresa Wilson agreed with the move. She reminded council Tuesday that she proposed eliminating the transfers for the current fiscal year. Council did not heed her advice. She said she planned to make the proposal again for the budget year that begins July 1.

Newly elected citywide councilman Duvall at first questioned whether City Council should take up the issue during a work session. A similar proposal by Baddourah had been removed from council’s agenda on Monday and from the Feb. 2 agenda. Duvall later said the vote was proper because the proposal was different than Baddourah’s and was related to council’s discussion about a timetable for adopting next year’s budget.

Councilwoman Tameika Isaac Devine could not vote because she was not at City Hall, participating instead by telephone conference call. Council rules allow members to participate in discussion from remote locations, but they may not vote.

Councilwoman Leona Plaugh did not attend the meeting. Baddourah said she has returned to Houston for further treatment of her cancer.

This story was originally published February 16, 2016 at 6:29 PM with the headline "Columbia council votes to end water, sewer money transfers."