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News Release

FOR IMMEDIATE RELEASE: Tuesday, January 24, 2012

Council Roundup: Potential impacts of legislation

Also, 'fireflow cost recovery'

The City Council on Monday considered potential impacts on Bellevue's budget of several bills now being considered by the state Legislature, which is in session until March 8.

The combined effect of the six bills could reduce city revenue from $2.2 to $15.7 million, though it's unlikely that votes on all six pieces of legislation would negatively impact the city. Councilmembers each year weigh in on state legislation to promote positions that are in the best interest of Bellevue.

The legislation (and the amount of revenue the city could lose) includes: a cell phone tax exemption (up to $6.9 million); changes to the way the Business and Occupation tax is collected ($1.6 to $6 million); annexation sales tax credit (up to $1.2 million); distribution of liquor profits (up to $920,000); liquor excise tax sharing ($655,000); and streamlined sales tax mitigation (up to $100,000).

Recovering 'fireflow' costs outside Bellevue
Also on Monday, the council approved extending the utility occupation tax to the water utility's gross receipts, including those received from customers living outside of Bellevue. The money will pay for "fireflow capacity" - including the cost of fire hydrants, oversized pipe and reservoir storage - for non-Bellevue customers.

Water customers in Medina, Clyde Hill, Hunts Point, Yarrow Point and small portions of Issaquah, Kirkland and King County will see the utility occupation tax of 10.4 percent on their utility bill beginning March 1.

The tax became necessary following a 2008 state Supreme Court ruling that the fireflow service should be paid for out of the city's general fund, not through water rates, as was previously done. To comply, Bellevue reduced water rates by 6 percent in January 2010 for all customers and increased the utility occupation tax on water by 5.4 percent.

A proportionate share of the cost of this tax was passed on to Bellevue customers as part of the utility's business expense, but not to customers living outside Bellevue during 2010 and 2011, while agreements with the affected jurisdictions were being negotiated. As a result, the cost to provide fireflow capacity to jurisdictions outside Bellevue during this time totaled $567,000.

Beginning March 1, the cost of the utility occupation tax will be passed on to all customers in the water service area. The money going to the general fund will be used to recover past costs of fireflow, as well as on-going annual costs for the service. Customers living in Bellevue will not be affected by this change.

Feedback: Anne Weigle, Utilities Assistant Director, 425-452-4634 or aweigle@bellevuewa.gov

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