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North Bend sets tax cap at 2 percent for 2001

NORTH BEND — The North Bend City Council voted on Nov.

21 to prevent property taxes from exceeding 2 percent next year, a move

that chopped $78,000 from the $4.5 million general fund budget for 2001.

The entire budget is $15,270,478, but the only part affected by the

tax cap is the general fund.

The decision was made despite talk that Initiative 722 — which

was passed by Washington voters Nov. 7 — could be ruled unconstitutional

or overturned in court. I-722 puts a 2 percent limit on property

assessment tax increases and, if not overthrown, would roll back any tax and fee

increases not approved by voters from July through December of 1999.

Three out of five council members, including Fred Rappin, Ed

Carlson and Mark Sollitto, voted for the tax cap. They said that they supported

it because the majority of North Bend residents voted for I-722, as well

as the previous year's controversial I-695, both of which sought to limit

tax increases. I-695 was found to be unconstitutional in court and overturned.

"I guess what swayed me was the fact that, yes, the citizens are

voting for this and we do owe it to them to represent their wishes," Rappin

explained.

Carlson said that he was the "lone voice in the wilderness" a year

ago when he voted against a 6 percent increase and is pleased with the

measure.

"I'm just delighted to see two of my fellow council members

come around this year after two statewide initiatives, so it's good that the city

is moving forward with the will of the people," he said.

"I think it's always a dangerous thing for elected officials or

government employees to assume that we all know better than the people

who voted," Carlson added. "I think the people are oftentimes very

intelligent, more so than the elected officials

certainly, and I think it's imperative that we follow their lead in the very

clear public input on taxes."

"That is a pretty resounding message that I think the folks would

like to see us tighten our belts," Councilman Mark Sollitto said.

But the other two council members, Jim Gildersleeve and

Elaine Webber, did not feel the same way.

"It is great to go along and to recognize the people's vote here, but

as it always is, something has to be given up in order to honor those

wishes, there is a cost," Gildersleeve said,

explaining that it's sometimes easy for residents to be "anti-tax." "But

sooner or later, it has an impact on your community."

Gildersleeve voted against the 2 percent tax cap and said he felt

the entire 6 percent was necessary, but would have compromised at 4 percent.

`I think a 2 percent increase is way too deep here, and I can't support

it," he said.

While Gildersleeve voted against the tax cap, Webber abstained

from voting altogether.

"I don't agree with what we're doing with the 2 percent" cap, she

said in an interview a few days later. "I think my job is to do what I think

is best for the community and I believe that some of the things that we'll

cut to find the missing money are things that we shouldn't."

Webber said she doesn't think that taxpayers were striking out against

the city, which takes only a small portion of taxes, but rather at "big

government," and feels implementing a 2 percent maximum was the wrong

action to take because it cuts necessary funds.

Because property taxes were limited to 2 percent over last year,

city officials have been scrambling to come up with solutions to balance the

2001 budget, which is 5 percent higher than this year's.

"The [budget] increase is necessary in order to discharge the

expected expenses and obligations of the city of North Bend, which are proposed

to be 5 percent higher than the 2000 general fund," said Elena

Montgomery, city treasurer, at the Nov. 21

meeting. "The proposed increase is mainly a result of contractual obligations

with labor unions, an increase in public safety-contracts for service and

cost-of-living adjustments [for non-union city employees].

"We had to get creative to be able to balance the budget,"

Montgomery said. She added that although the staff was able to find places to cut the

budget without dramatic impact, if the 2 percent cap continues beyond

2001, regular services could be cut.

Gildersleeve said he's concerned about the budget cuts resulting

from the decision, especially since the City Council has not voted for less than

6 percent in more than 20 years.

"I think there was a significant point made by the city treasurer

that our actual obligations this year are increasing at about 5 percent, so

you can see that we are setting up a possible deficit trim," he said. "One

year is not going to put us in the hole, and we all know that, but if this were

to continue for many, many years into the future, rather than at least

collecting enough additional revenues to account for the cost of doing business, so

to speak, I think that the city's financial posture would be weakened."

Gildersleeve added that future council members will have to be

aware of the money necessary to run the city.

But the council members who support the cap still thought it was

necessary.

"This is a vote for 2001, this is not a vote forever," Sollitto said. "The

current budget for the city of North Bend is $4.5 million. The impact of

reducing the property tax increase from 106 percent to 102 percent is $78,000,

or about $22 per household, assuming that each household has a value

of 200,000."

However, the lost revenue could possibly result in cutting future

public services, including police, park and street maintenance.

"At this point it is a [tax] break [for] one year and we have

trimmed our budget in order to come up with a balanced budget, and we probably

will have to eliminate some services a little or tailor them down a little more

than we would like," Rappin said. "We would love to continue to give

people better services as far as growth, parks services, human services and

any number of things, but we do have to come up with a balanced budget

every year."

Rappin explained that many cities are raising their taxes higher than

2 percent, and that Issaquah is not raising them at all and Sammamish is

actually reducing its taxes. The cities of Snoqualmie, Duvall and

Carnation have raised their tax levies the full 6 percent allowed.

Montgomery explained in a later interview that in order to

compensate for the $78,000 that will be cut, operations budgets for each city

department were cut, along with some legal expenditures.

In addition, the largest amount of money being cut was slated to pay

off the city's street sweeper ahead of time, which will now have to wait.

Some community services were also cut, including money for

painting the senior center and a donation request for the Human Services

Commission, which funds other Valley non-profit agencies.

Money that was in a city-owned lid guarantee fund that amounted

to $36,000 was pulled to offset the chopped budget. Montgomery

said that this type of money will not be available in future years, if the cap

is kept at 2 percent.

Webber said she wished North Bend residents would have offered

an opinion on the tax cut and is uncomfortable with the services that

were cut.

"One of the things that I very much feel that the citizens need to do

when they are voting to curtail public spending is to step forward and tell us

what it is they want us to curtail," she

said. "As it is, we have no public input whatsoever and the decision has been

left to us. And as Mr. Rappin pointed out, we are here to do the people's will

and the people's will is to cut, but the choices we make may be the very

services the people value and aren't the ones they had in mind to have cut.

"A

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