Sewer surcharge a stinky surprise for Mac residents

The city of McMinnville pulled the budgeting equivalent Tuesday of shoot first, aim later. 

In the process, it established a new franchise fee for residents that will add more money, not into the dedicated sewer fund, but rather into the unrestricted general fund. Sound accounting practices and long traditions make segregation of such revenue virtually universal, across the country.

Councilors imposed a 5% franchise fee on its own wastewater utility. That will be on top of a 2.8% rate increase approved in January. As a result, we are now facing a total increase of 7.8% July 1.

The 2.8% hike is considered a user fee, and is dedicated to covering sewer system operating costs and capital improvement expenses, based on a lengthy and professional rate analysis.

The 5% franchise fee add-on isn’t a completely new idea. It’s been mentioned briefly a few times in the last two years as a possible source of additional revenue for the city. It also got a brief prospective mention earlier in the current budget process, but was only seriously considered by council in its present form just two weeks prior to its passage.

The city is expecting the additional fee to generate about $500,000.

All franchise fees revenue goes into the city’s general fund, but have traditionally been created or increased with at least some understanding of how it the money will be spent. The Frontier and Comcast Cable fees goes to funding McMinnville Community Media; the Recology Western Oregon franchise fee has been increased in recent years to fund additional recycling services.

This time, councilors discussed the need for money to support affordable housing endeavors, enforcement of a new camping ban also enacted Tuesday, and other efforts to address homelessness. However, mentions of the city’s depleting reserves also surfaced in the budget process, and once funds flow into the general fund, they become fair game.

Asked to clarify allocation plans, City Manager Jeff Towery said staff understood they had been directed to work out details for presentation to the council next month.

Councilor Adam Garvin, one of two who voted against the surcharge, requested the city and his colleagues “be transparent about what it’s for.” He urged, “If it’s for increased reserves, then say that and own that. If it’s for some other purpose, then be very transparent about it.”

Several councilors said the city needs the funds, but for what use remains unclear. Isn’t that a discussion that should have taken place earlier in the process? 

Adding $500,000 in tax revenue — while establishing a new type of fee — in the ninth hour of the budget process, without identifying a dedicated use — strikes us as sloppy governance at best. 

Councilor Sal Peralta would likely agree, even though he eventually voted in support. He was swayed by feeling he would support the increase once a clear allocation plan was presented, and with the information that separating the 2.8% increase and 5% increase could be burdensome for the city’s semi-independent Water & Light’s own budgeting process.

The city has been feeling intense heat lately, some warranted and some well over the top.

In passing an ordinance significantly reducing the visible presence of the homeless in our community, the council acted boldly. But the accompanying wastewater franchise fee is bound to leave a bad taste in the mouths of residents and business owners.