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Water district fight has new $20 million hot potato

Commissioner Nick Fish says water district backer misled public


Pssst. Want a 5 percent cut in your Portland water and sewer bill?

It’s possible if voters approve an independent board to run the city water and sewer bureaus, but there’s a huge catch. The board could end the city’s 5 percent tax on its own water and sewer ratepayers — but that would strip nearly $20 million a year from city police, fire, parks and other services.

News of the potential tradeoff emerged Wednesday, opening a new front in the raging battle over the future of Portland’s water and sewer agencies. The battle is likely to be settled in May, when Portland voters are due to consider shifting control of the sewer and water agencies from the City Council to an elected board.

During Wednesday’s Portland City Council meeting, City Commissioner Nick Fish accused water district backer Kent Craford of misleading voters in his comments published in a Portland Tribune web story on Tuesday. Craford had told the Tribune he didn’t like the idea of the city’s 5 percent utility license fee, because it amounts to the city taxing its own sewer and water customers, but his initiative wouldn’t tamper with it. “We thought that would be going too far,” Craford said.

Fish, who oversees the water and sewer bureaus, was outraged, saying Craford misled the public. Citing a city attorney’s analysis, Fish said the initiative would indeed strip the City Council’s right to levy the utility license fee on sewer and water ratepayers. The 5 percent tax is projected to yield $19.6 million for the city general fund this fiscal year, a $2.5 million bump over prior years.

The initiative shifts the power to levy the utility license fee, or not, to the elected water district board, Fish said. “As proposed, we wouldn’t have any say,” he told fellow city commissioners. “I think people should know that.”

Told later of Fish’s remarks, Craford said he’d consult the attorney who wrote the initiative, Greg Chaimov. Craford called back later and confirmed that Fish was correct.

Under the proposed initiative, Craford said, “The board has the authority to set fees and surcharges, so the utility license fee would fall under that.”

Commercial water users and other initiative backers didn’t intend to change the utility license fee, Craford said. And the board also could decide to increase the fee, he said.

Any candidate for the board who advocates ending the utility license fee would provoke opposition from police and firefighter unions, among others, Craford said. “I just don’t see it happening.”

Section 2-105 of the city charter grants the City Council the right to “grant licenses with the object of raising revenue or of regulation.....” That provides the council’s underlaying authority to levy the utility license fees, said chief deputy city attorney Benjamin Walters.

The water district initiative seeks to amend Section 11-104 of the charter, which discusses how to carry out that authority, specifically for water fees. The amendment shifts the power over fees from the City Council to the water district board, Walters said. “I don’t think it’s unclear, legally,” Walters said.

Over the past nine years, the city has gradually reduced what had been a 7.5 percent utility license fee on water and sewer ratepayers, to the current 5 percent, the same amount levied on gas, electricity and telephone utility ratepayers.

Backers of the license fee often depict it as a way for the city to charge for the use of public right of way, including streets. City Commissioner Amanda Fritz said Wednesday if there are fires or public safety concerns involving the city water and sewer utilities, they benefit from police and fire services, which get much of the money from the utility license fees.

Fish asked Mary Beth Henry, manager of the Office for Community Technology, at Wednesday’s council meeting to explain the utility license fee and its rationale. Henry made no bones about calling it a “tax” on utilities, both city-owned and private-sector ones. “It’s really for the privilege of operating a utility in the city,” Henry said.

After the brief council discussion, Fish said his peers agree it’s fine to tax city water and sewer ratepayers, as long as it’s at the same rate as the private utilities. There is a future discussion to be had on whether the 5 percent tax rate is appropriate, Fish said.

Fish had some harsh words for Craford after learning he backtracked on the issue.

“I’m disappointed that Mr. Craford wasn’t truthful when he said his own initiative wouldn’t change the charter concerning utility license fees,” Fish said. “It clearly does, and it sets up a real possibility that a future board of the water district could refuse to pay the utility license fee.”

Craford said Tuesday that signature-gathering for the initiative is going so well that there’s no doubt it will make the May ballot.

Now the campaign has a new $20 million controversy.

Will voters like the idea of creating an independent board to end the utility tax and cut their rates 5 percent? Or will they be too alarmed by the prospect that police, fire and parks services could be slashed?

Stay tuned.