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A former city councilman and longtime critic of Petaluma government is suing the city over what he claims is the misappropriation of millions of dollars in sewage treatment fees.

Bryant Moynihan long has challenged how the city uses the money it collects from water and wastewater ratepayers, claiming it has been used to cover mismanagement of the city budget and to augment overspending in the general fund.

In a lawsuit filed this month in Sonoma County Superior Court, Moynihan alleges the city has wrongfully spent at least $4.7 million from the wastewater fund since 2004.

He is demanding the city stop such spending, repay the general fund and pay his attorney's fees.

The city hasn't filed a response to the suit. A case management hearing is set for May 3.

At issue is whether certain functions that may be indirectly or partially related to wastewater management can be funded with the fees. Moynihan says no.

For several years Petaluma and other cities have included storm-drain maintenance, for example, as a function that relates to wastewater management and is therefore payable with ratepayers' fees. The city's theory is that diverting storm water from the wastewater system is a benefit to the wastewater fund because diverted rainwater doesn't have to be treated at the city's sewer plant.

"It's an indirect if not a direct benefit," City Manager John Brown said.

Similar charges total between $600,000 and $900,000 a year, Brown said, and are noted in the city's budget. A recent audit of the water and wastewater fund supported the accounting.

But the city has recently acknowledged that Moynihan is at least partially correct.

Proposition 218, an initiative adopted by California voters in 1996, established rules for raising fees and taxes in the state.

"City management and our city council have been violating the state Constitution, state government code, the city charter and their oath of office by essentially transferring the ratepayer's enterprise funds into the city's general fund, creating an illegal utility tax," Moynihan said.

He objects to wastewater fees funding salaries, supplies, landscaping, vehicles, computers and other items used in part to manage the fund.

Brown partially agreed with Moynihan's argument. A court ruling on the issue holds that if the benefit isn't directly tied to the fund, fees or taxes to pay for it must be affirmatively approved by voters.

"Ultimately, the lawyers agreed there was a technicality," he said.

In response to that, Brown said the city has removed $872,000 this year from the wastewater fund.

It's unclear whether that burden will be borne by the general fund — the same pot of money that funds most city services and salaries — or other budgets.

The council is set to discuss the lawsuit in closed session next month.

Moynihan said he has spent years "asking them nicely" to change their accounting practices.

"It is with deep regret I realize a lawsuit is the only manner left to protect the citizens of Petaluma from unwarranted and unapproved taxation," he said.

Bryant Moynihan served on the council from 2001 to 2004. He previously forced two water and sewer rate reduction initiatives, both of which voters rejected.

Staff Writer Lori A. Carter can be reached at 762-7297 or lori.carter@pressdemocrat.com.