The water and sewer bills Portlanders pay do more than cover the cost of city utilities. Every year, the City of Portland's Water and Environmental Services bureaus divert millions of dollars into the city's budget to cover the cost of services and to help pay for the operations of other departments.

Money from utility bills into is fanned out into places as far-reaching as the mayor's office and Portland Fire & Rescue Bureau.

This year, $73 million will be shared, spent or otherwise diverted from the water and sewer bureaus into other city budgets.

A city measure on the May 20 primary ballot would remove control of those bureaus from City Hall, creating a public utility run by an independently elected board.

And city officials are now sounding the alarm, warning that millions from the water and sewer bureaus that help fund other city services would be at risk.

An internal city memo written by a top Portland's financial analyst and obtained by WW says the city's budget could lose as much as $43 million a year if voters approve the May ballot measure.

The memo, written to interim chief administrative officer Fred Miller by principal policy analyst Betsy Ames, says the city expects to receive $73.6 million next fiscal year in financial agreements and overhead payments from the water and environmental services bureaus.

(Other bureaus return about $30 million in utility payments to the Water and Environmental Services bureaus, for a net of $43 million.)

The city's annual general fund budget is around $390 million.

Miller writes those internal agreements "may or may not be impacted" if voters pass a ballot measure creating a public water district—handing all decisions on water and sewer spending to an independently elected board. The new public utility could decide to stop sending money to the city's budget.

For example, the ballot measure would bar the new public utility from using city attorneys and auditors. Next year, the water and sewer bureaus are expected to pay $4.3 million to the City Attorney and City Auditor's office for overhead and services.

The end of financial agreements between the new public utility and the city could be an unintended consequence of approving the measure, blowing a large budget hole in city finances.

On the other hand, it may allow a new utility district a way to save money and slow or halt annual rate increases. Proponents of creating a new public utility have promised lower water and sewer rates if the bureaus are moved out from under city control.

Members of the City Council oppose the measure, and the internal city memo could be used to push the argument against voters approving it.

Mayor Charlie Hales' office this afternoon confirmed the authenticity of the memo.

"The document is real," says Hales' spokesman Dana Haynes, "and we absolutely cannot comment on it."