The short answer is projected revenues exceed projected expenses. An important part of the cityhood process is the completion of a feasibility study. In Georgia, the General Assembly only accepts the professional feasibility studies prepared by the University of Georgia, Georgia Tech, and Georgia State University. The main purpose of the analysis is to estimate the ability of the proposed city of East Cobb to meet its expenditures with available revenue sources. Based on this analysis, the proposed city of East Cobb could expect annual revenues of approximately $27.72 million and annual expenditures of approximately $24.65 million yielding a surplus of approximately $3.07 million, and an additional $1.8M contingency. The feasibility study is conservative on both revenues (low) and expenditures (high).
The feasibility study did not consider any funds the city would qualify to receive through a Memorandum of Understanding (MOU) between Cobb County and its municipalities. There are two reasons for this. First, the current agreement between Cobb County and its six existing cities is expiring and is set to be renegotiated during 2023. And secondly that in addition to the City of East Cobb effort, there are three other new city incorporations seeking voter approval during 2022.
A MOU is an agreement Cobb County uses to define fund allocations to its cities for services the cities provide and that are paid for through the Cobb County General Fund. The Official Code of Georgia Annotated (O.C.G.A.) §36-70-2 makes it unlawful for a resident to be taxed twice for the same service. Therefore, the County transfers money to each city based on the services the city provides but Cobb County collects taxes for via the General Fund.
The feasibility study also does not consider the long-term reality that each city in Cobb County receives a portion of SPLOST funds to be used on projects specific to the city. These funds are allocated based on population. It is reasonable to assume the City of East Cobb would begin receiving SPLOST funding as early as 2028 as a source of revenue that is dedicated to specific capital improvements within the proposed city limits.
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