Budget questions continue at Manzanita City Council

The July 10 meeting of the Manzanita City Council continued the discussion former city manager Randy Kugler has been working on.  When the meeting opened up for public comment, Kugler took the floor about the budget issue involving 50 percent of the city manager and assistant city manager’s salaries being funded from the City Water Fund.

One of the justifications given to the city about this was that the city manager also acts as a city water utility manager and spends four hours each day managing activity of the water utility. Kugler had requested a copy of the city manager’s job description and found no description of acting as a city water manager.

Kugler then reviewed the job description of the public works director, which indicated work with water management. Kugler questions if the water system is so complex that the director needs two additional water utility managers. The previous city manager Jerry Taylor had said that other cities are using this system where 50 percent of the water budget goes to paying the city manager.

Kugler contacted city managers from around the state to see if this was correct. For the cities that employ both a city manager and a public works director, the average for city managers salaries to be from the water utility is 10 percent.  Five of the cities he looked at paid 0 percent of the city manager’s salary. He says that by the City’s own policy statement in the Budget document, all money in the water fund must be used for the water utility. The city hasn’t given any common-sense justification for why the city manager and assistant city manager are receiving 50 percent of their salaries from the water budget.

Kugler had requested a written explanation from the public works director to how the city manager and assistant city manager spend a total of 8 hours between them each day operating the city’s water utility. The director acknowledged the general supervisor role of the city manager with the water utility, but he did not know the direct or personal details of the activity or the time spent.

The council had instructed staff to investigate the matter in time for next year’s budget process and expressed no reservation in investigating the staff during this year’s budget process. Kugler questions how the city plans to make up for the hundreds of thousands of dollars taken from the water fund since the policy was first implemented 11 years ago.

After Kugler spoke, Mayor Mike Scott responded. On June 26 at 7 p.m., the council members had a special city council meeting to approve the budget and had a public hearing as well. The salary and benefit costs of the city manager position was split 50/50 between the water fund and the general fund since 2001 or 2002.

“That is eighteen years,” said Mayor Scott.

Previous to that, it was split at 75/25 percent. The water distribution system is the only business type of activity that we have in Manzanita, said the Mayor.  

If the water system was its own separate business, it would have its own general manager and board of directors. As the city manager and the city council are responsible equally to both the taxpayers and the rate payers, the cost of the city manager should be divided equally between the two groups, said the Mayor.

Scott mentions Nehalem, which pays the salary for the city manager 90 percent from the water fund and 10 percent from the general fund.

“Nehalem only collects 46K a year from property taxes. If they didn’t use water revenues and timber sale funds, they wouldn’t be able to pay even one of their two-member City Hall staff,” said Kugler.

In addition, Kugler found that the Nehalem city manager’s job description specifically identifies that he/she is responsible to “supervise the operation of City owned and operated public utilities”, thus accounting for this increased level of water utility funding.

There was a recommendation made to instruct staff to review alternative methods of charging the water fund, for administrating indirect costs and recommend a method or any changes made for the next budget year of 2020-2021. The 10 members approved the city budget.

A member of the budget committee who has been with the committee for 28 years was sitting at the July 10 meeting. This member was there in 2001 and 2002. The council member asked this committee member, Terry Staehnke, why they moved the allocation from 75/25 to 50/50.

“I have no idea,” said Staehnke.

Staehnke asked if he was being accused of doing that and that he does not make the budget. Gerald Wineinger, an audience member, spoke up, saying that at the last meeting, some of them were being attacked.

“It’s just physically and morally wrong what you’re doing,” said Wineinger. “Because you’re saying eight hours a day of two people in this office, at least for the years I’ve been here, has been charged to water. They cannot justify what they’ve been doing those eight hours a day, but yet we’re called attacking.  We’re asking the council, ‘why are you doing this?’”

Scott responded by saying that he had just explained why they had been doing it for 18 years. Wineinger said that the explanation isn’t realistic.  

Scott then asked for public comment on any other topics and stated that this topic was now closed.

“The Water Fund is a cash cow,” said another audience member, Rob Borgford. “They are cash cows for virtually every city and for being able to get money to the general fund, there are at least five ways of doing it. This is one of the five, but I think the point is that it’s not defensible.”


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