The city went too far in spending revenue from Portland's water and sewer customers on public toilets and political campaigns, a judge says. But leaders were justified in two other contested uses of utility money.

That ruling today by Multnomah County Circuit Court Judge Stephen Bushong is an indication that city council doesn't have as much authority as the city attorney's office has argued when spending ratepayer dollars. And, by the city's own admission, the decision could be a bellwether for future decisions from Bushong as a years-old lawsuit crawls through the court.

Bushong—in ruling on just four controversial expenditures—said city council went against the charter's intent by using ratepayer money to help fund Portland's scuttled "Voter-Owned Elections" program and, in using Portland Water Bureau funds for the Portland Loos. But he found two other contested expenses were on the level: $6 million in sewer money spent on a swath of river front property, and $3.9 million used to relocate water pipes to make way for the Max. Those two projects will now be excised from the larger lawsuit. The loos and elections spending will stay in.

"The voters intended that monies paid into the funds by water and sewer ratepayers would be spent only on matters that are reasonably related to the water and sewer services provided by the City," Bushong wrote.

Back in mid-February, attorneys gathered in the Multnomah County Courthouse to pitch the judge on their respective cases.

Deputy City Attorney Terence Thatcher said at the time the city has "very broad discretion" where sewer and water funds are concerned. He said the Loos project "furnished" citizens with water, and that Voter-Owned Elections (which offered public financing to people running for city council, mayor, or auditor) helped pick the city leaders who would control utilities in the future. Only things like significant fraud or abuse would be subject to judicial intervention, Thatcher explained. In the meantime, voters are free to vote politicians out of office if they don't like their decisions.

Bushong disagreed. The essential question, he wrote in today's decision, was what citizens intended when creating limitations to the use of sewer and water money nearly 50 years ago.

"When the voters enacted these provisions in 1966, they did not intend to give the Council authority to spend water and sewer fund for anything as long as the City can articulate some relationship or connection, no matter how tenuous, to the water and sewer systems," the judge wrote. "If voters did not intend to limit Council's authority, there would be no reason to require the City to deposit proceeds from the sale of water in the Water Fund, prohibit the transfer of funds to the general fund, and limit the expenditure of water funds to matters 'related' to the water system..."

The judge said the city was justified in using sewer funds to help pay for River View Cemetary, since the land—by not being developed—will ultimately help control stormwater runoff in Portland. And Bushong said it was permissible for the city to use water money to move pipes out of TriMet's way.

City officials were quick to cheer the ruling. By disagreeing with the plaintiffs' proposed standard for what makes a good utility expenditure versus a bad one—that its "primary purpose" involves the utility system—the judge took away much of their rationale for bringing suit, according to the city.

“I am pleased the court rejected this blatant attack on the City’s environmental stewardship,” said a statement from Commissioner Nick Fish, in charge of both the water and sewer bureaus since last summer.. “The two items, which the Judge ruled were outside the bounds of the Charter, are yesterday’s news and have already been fixed.”

The civil case was filed in 2011, by a group of plaintiffs including former City Commissioner Lloyd Anderson and some of Portland's bigger industrial players. Some of the same people are also instrumental in a bid to put the Portland Water Bureau and Bureau of Environmental Services in the hands of a new board.

The city has said in the past Bushong's ruling is an indication of things to come.

"The City’s attorneys requested summary judgment on four items in the suit to get a sense for how the court would rule on the other items," said a press release released by Mayor Charlie Hales' office in February.