Bellevue council considers raising property taxes

Bellevue city officials are considering raising property taxes to help pay for a backlog of almost $500 million in road, park and cultural improvements.

The move is surprising, given the city is in good financial shape and officials already proposed adding 17 new positions and several new road and park projects without raising taxes.

Downtown Bellevue is also in the midst of a development boom, with several high-rises under construction and millions of dollars in tax revenue flowing into city coffers. The city will have $12 million in development money over the next two years that it has yet to decide how to spend.

But the City Council says that's not nearly enough.

Increases in utility, pension and salary costs have eaten away a lot of the money from new development, city leaders say, and ignoring a $500 million backlog in capital projects threatens the city's status as a thriving regional center of commerce.

Mayor Grant Degginger said park and human-service projects are vital, as well as road improvements downtown, where many of the city's new residents are headed. "That growth is happening now and those people need to get around," he said.

The council is considering three options — or a combination of the three — to help alleviate the backlog:

• For years, the city has had one of the lowest property-tax rates in the state, with the city lowering the rate as property values have shot up. The council could decide to keep the rate steady, or lower it by a smaller amount than normal. This would raise as much as $211 million over 20 years and cost the average homeowner up to $170 a year.

• The city has a long-standing policy of automatically setting aside maintenance costs for any new capital project. City officials say this is careful budgeting, but it has limited the amount of money the city can devote to new projects.

The council is considering using the maintenance money for capital projects instead, and then increasing the property-tax rate to pay the maintenance costs. The "replacement levy" would provide as much as $158 million over 20 years and cost the average homeowner up to $166 a year.

• The city has traditionally used ballot measures to create and expand its park system, with eight measures approved since the 1950s and the last expiring in 2008. A new measure, either a bond sale or property-tax levy increase, could raise as much as $40 million for park projects and cost the average homeowner $78 a year.

Unlike the park measure, the first two options could be endorsed by the council without voter approval, though it could decide to put all three plans to voters next year.

At a budget public hearing Monday night, many community leaders in search of money supported the city's work to find more money for projects.

Leslie Lloyd, president of the Bellevue Downtown Association, said she wished the council had begun talking about new funding options much earlier in the year. It's clear, she said, that the city's budgeting practices have prevented it from paying for the infrastructure needed to support new residents and businesses. "We're concerned that the city is falling behind."

The Bellevue Chamber of Commerce said it opposed any property-tax increase because it would hurt the city's ability to attract and maintain businesses.

Renay Bennett, president of the Bellecrest Neighborhood Association, said the tax increases would hit residents too hard, and a good chunk of the money would go to projects that aren't necessary. "There's a lot of unmet needs out there, but there's also a lot of unmet wants," she said.

Under a plan proposed by City Manager Steve Sarkozy this week, the city would use the new tax money and money from new development to pay for such projects as improvements to West Lake Sammamish Parkway and Northeast Second Street, pedestrian and bicycle safety, Ashwood Park, Bellevue Arts Museum and the proposed Performing Arts Center Eastside.

The City Council wants to decide whether to raise taxes — and by how much — as it debates the 2007-08 budget over the next few weeks. The council meets at 6 p.m. Mondays at Bellevue City Hall, 450 110th Ave. N.E., and plans to approve the budget Dec. 4.

Ashley Bach: 206-464-2567 or abach@seattletimes.com