Utility tax, rate increases approved

By Natalie Singer
Seattle Times Eastside bureau

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The Bellevue City Council last night approved a balanced budget for 2005-06, resorting to a utility-tax increase to close a predicted $1.9 million gap.

Utility-tax rates will be raised from 4.5 percent to 5 percent on gas, electric, water, sewer and storm-water drainage bills — an increase of about $1.18 a month for the average household.

Paired with rate increases for water, sewer services and storm/surface-water drainage, which the council also approved, the changes will add a total of $6.78 a month to a typical residential utilities bill in 2005 and an additional $1.50 a month in 2006.

The changes will begin in January.

Before the 5-1 vote, city leaders said the increases were a last resort. They spent months whittling away the projected deficit, which occurred in part because increasing health-care and pension costs for city employees drove up the city's anticipated expenditures.

By opting for the tax and rate increases along with a slight staffing reduction, the council avoided cutting any major programs or services.

"We're pretty stingy when it comes to squeezing every bit of benefit out of every dollar," Councilman Grant Degginger said.

He said the council could have moved forward without a balanced budget but chose instead to fix the problem. "We're taking the pain now rather than dealing with it later, when it could be worse," he said.

The total two-year city budget is $982 million, up from $824 million in 2003-04. Much of that difference comes from bond proceeds being used to convert a downtown office building into a new City Hall.

Councilman Don Davidson was the only member to vote against the budget; Councilman Conrad Lee was not at the meeting.
 
"I don't think it's necessary to raise taxes to support the budget," Davidson said last night. He favored using the larger-than-expected sales-tax revenue from the Lincoln Square and Overlake Hospital Medical Center construction projects — about $1.6 million — to balance the budget.

But instead, the council set that money aside in a contingency fund. It could be spent later in another vote. For example, the council recently applied similar contingency funds toward the purchase of the new City Hall.

The council also considered but eventually decided against increasing fire-inspection fees and the cable-TV tax to close the budget gap, deciding that the utility tax would be a burden more evenly shared by both residents and businesses. They also voted not to touch any of the $4.4 million rainy-day reserve.

Other budget highlights:

• City fees were raised for false alarms involving home-security systems. A first false alarm will remain without charge; a second one will go from $25 to $75; a third from $50 to $100.

• The council reduced the property-tax levy rate from $1.32 to $1.23 per $1,000 of assessed value, citing new construction in the city.

• City staffing levels will decrease by 11 positions in 2005-06, and to further reduce costs the City Council decided against hiring two additional fire-inspection officers.

Natalie Singer: 206-464-2704 or nsinger@seattletimes.com