Portland Auditor Mary Hull Caballero. Not please with the mayors budget.
Portland Auditor Mary Hull Caballero. Not please with the mayor's budget. City of Portland
It's gotten lots of attention, but a proposed business tax hike isn't the only thing rankling folks in the historic $510 million general fund budget proposal Mayor Charlie Hales unveiled last week.

Incensed over funding in that proposal, City Auditor Mary Hull Caballero threatened earlier this week to stop overseeing administrative appeals held in the Hearings Office she oversees.

It's where you go if you think your water/sewer bill's unfairly high, for instance, or if you don't think your car was legally towed. And if the dispute isn't worked out, that hearings office will be out of its long-time home come July.

"The Mayor's proposed budget does not adequately address the perennial funding problems with the Hearing's Office, so I am withdrawing consent for my office to administer it," Hull Caballero writes in a May 4 memo to Portland City Council [PDF] . "City Council needs to develop a transition plan and assign someone to manage it."

The memo's a boiling point in a long dispute between Hull Caballero and council about how her office—wholly independent from city council and other city bureaus—should be funded.

Right now, a segment of the appeals that go before the hearings office are paid for, individually, by other government agencies. So when there's an appeals hearing for a shady tow, the Bureau of Transportation or Police Bureau send the auditor a check. When someone wants to dispute a ticket they got riding a bus or the MAX, TriMet does the same. The Bureau of Development Services pays for land-use appeals, as well.

Hull Caballero wants to change the system a bit. Instead of relying on those hearings fees to operate—potentially at a deficit if there aren't enough of them—she's been arguing that the city should front her the total cost for the hearings office, and that she'll pay back the city's general fund with revenues that come in. Such a scenario would eliminate worry about her finances, Hull Caballero says, if not enough cases come in to cover overhead costs.

"I don't believe that accountability functions should be paid for on a cost-recovery basis," she says. "We have a set number of people who staff the hearings office every day. They can't control their workflow, but they have to be on the job everyday."

Hales and the City Budget Office disagree with the argument. Where the auditor asked for $137,275 more in general fund cash for hearings this year, the mayor's budget tacked on just $8,576 extra (for a total $366,544 in general fund money allocated for hearings).

And the city's budget director, Andrew Scott, says that's the way it should be. In a response to Hull-Caballero's memo, Scott argues there are problems with what Hull Caballero wants.

First, he says, it sets a bad precedent. "There are no City programs of which we are aware that receive more resources than are required in case fee or external revenues fall short," Scott writes. "Locking up General Fund resources 'just in case' other revenues fall short is not the best use of these scarce resources."

Scott also says Hull Caballero hasn't been able to describe the hearings office's work in enough detail for budget writers to even land on an appropriate "base level" general fund allotment. Hull Caballero says it's 3.5 positions "and their associated materials and services. That’s how all other divisions in my office are funded."

Perhaps most interestingly, Scott argues there's a risk Hull Caballero's suggestion could result in money from sewer and water service subsidizing appeals for TriMet or other agencies. That would be a misuse of ratepayer money, a touchy issue over which the city's already been locked in litigation for years.

That last argument is news to Hull Caballero. Though she's been raising the funding issue for two budget cycles, she says the City Budget Office never raised the specter of misusing ratepayer money until now. And it's not enough to force the auditor to change her stance.

She says the choice that's before council is to either address her funding concerns, or figure out another way to conduct administrative hearings. The city could farm the hearings out to a third party, she says. Or it could create hearings offices in each distinct bureau, though Hull Caballero suggests that imperils the hearings office's reputation as an "impartial, independent entity where both sides can get a fair hearing."

"What they can't do is proceed the way it is," Hull Caballero says. "I've taken away that option."

It's unclear if Hales is taking any steps to shuffle the hearings office. We've reached out to his office for comment.