Tax revenue may ease cities' pain in adding residents

The state is so determined to have cities in King, Pierce and Snohomish counties absorb unincorporated communities along their borders that it appears willing to share its tax revenue to get the job done.

More than 200,000 King County residents could call cities such as Renton, Kirkland and Federal Way home in the coming years as a result.

A bill passed this week by the state Legislature would give cities that annex communities of 10,000 residents or more a percentage of state sales-tax revenue generated within their borders each year for up to 10 years. The amount of money they receive would be tied to the population annexed, would apply to cities that commence annexations before 2010 and would help them afford the cost of providing police, fire, parks and other services to a larger population.

Senate Bill 6686, which received bipartisan support from several lawmakers who hail from the affected communities, is awaiting the governor's expected signature.

Cities have been hesitant to annex the largest of these areas, given that few of the mostly residential communities generate enough tax money to support their own upkeep. The benefit of the legislation would be to give them time to lure businesses to the new areas or otherwise develop a tax base to pay for services for new residents.

The change would make annexation much more affordable, said Dave Ramsay, Kirkland city manager. Kirkland predicts a $5 million annual deficit when it eventually annexes the Finn Hill, Kingsgate and Juanita Beach neighborhoods, a change that would add about 35,000 new residents to the city of 45,000.

Kirkland would receive about $4 million from the plan, Ramsay said. Reviewing the budget and cutting some costs could close the gap. Kirkland Mayor Jim Lauinger said the city is assembling a team to analyze the situation and that annexation will be a topic at the City Council's retreat later this month.

"We'll have to work with the governor's office so she knows how important this is to the city and King County," Lauinger said.

King County is working with a number of cities to annex remaining urban unincorporated lands. County Executive Ron Sims has said it is more efficient for the county to focus on serving rural areas and to leave urban areas to cities — the vision for the future under the state's Growth Management Act.

Those who live in the unincorporated communities in question have mixed views. While some long for a nearby city hall and local police, others resent the possibility of higher business taxes or overzealous code-enforcement officers.

Renton will see which neighborhoods approach it and decide how to proceed, said Alex Pietsch, administrator for the city's Department of Economic Development, Neighborhoods and Strategic Planning.

"We're not the initiators of annexation. We've always relied on residents to pursue annexation, and if they do, our arms are wide open," he said.

Karen Gaudette: 206-515-5618 or kgaudette@seattletimes.com