Newcastle faces crossroads in city funding

After causing a bit of a furor a few weeks ago with a letter to a local newspaper, Newcastle Mayor Rich Crispo wants to reassure residents that the city isn’t going anywhere.

However, some residents are starting to think differently.

On Jan. 5, Crispo published a letter in the Newcastle News provocatively titled “Should Newcastle Remain a City?” In the letter, he details the struggles Newcastle had in balancing its 2017 budget, including what he describes as “a premature, ill-advised vote on a utility tax before 2017 expenses were established.”

Crispo said the title was one meant to grab attention.

“The reason I wrote it and used the wording I used was to entice people to read the rest of it,” he said.

Newcastle dealt with a tumultuous budget process, but ultimately passed a balanced one, of $8.85 million. Councilmember John Dulcich and city staff helped construct the financial scaffolding onto which the balanced budget was built. However, increasing costs for public safety as the population is expected to grow by 30 percent in the next three years make it a temporary solution.

Nola Coston, a Newcastle resident, has major issues with the way the city handled its budget process.

”We believe Newcastle residents are willing to accept a somewhat lower level of services, only if total city taxes do not exceed that of surrounding full service cities,” she wrote in a letter co-authored by Newcastle resident Bill Erxleben. “Newcastle, after all, is a limited services city with very high property tax, much higher than Bellevue’s. Our city taxes are currently comparable to Bellevue’s, a city with much higher service levels.”

Coston and a contingent of residents thought Crispo’s article posed an interesting question, and that if the city can’t provide its limited services at a lower taxation rate than Renton, Issaquah or Bellevue, maybe Newcastle no longer remaining a city is a worthwhile conversation.

Newcastle does not face a budget crisis in 2017, for 2018 and 2019 the city could find itself deep in the red without another revenue source.

“If we were unable to balance the budget and wanted to keep the same services without raising a new source of revenue, we’d have to go off our reserve,” Crispo said. “That’s not the sign of a healthy city.”

Newcastle currently contracts its law enforcement through the King County Sheriff’s Department and it’s fire protection services through the city of Bellevue. The city provides no utilities, relying on Puget Sound Energy and the Coal Creek Utilities District.

What the city does provide is public works, a planning department, snow plows and other things to keep a city afloat, including a city manager, city clerk and legal representation. The growing need for services, typical inflation and a static revenue source means that — according to the city — Newcastle will see a deficit of more than $660,000 in 2018, $893,000 in 2019 and more than a million by 2020.

“As a city, Newcastle has less revenue options,” Crispo said. “We have to be very fiscally conservative.”

Crispo said he wants to find a way to keep Newcastle solvent, but not everyone agrees with his thoughts.

“There is always, for whatever reason, a group of residents who wants to be a part of Bellevue,” he said. “I think what is best for the residents of Newcastle is to control their own destiny and have a voice. I’m in favor of staying a city, but as an elected official I will represent my constituents.”

To unincorporate Newcastle, the city would have to pass a special referendum, then individual neighborhoods could petition to be annexed by an adjacent city.

Coston said that Crispo is presenting an unequal choice by juxtaposing new taxes or totally unincorporating. She said a conversation with Bellevue about consolidating could provide would give residents comparable taxes to the larger city while having a larger tax base from which to draw.

“There is a second alternative,” she writes. “Dramatically reduce expenses in the city and live within our current revenues, but the present council has little appetite for that solution”

Such a move would only be the third time cities consolidated in Washington history, Coston said, so the likelihood of entering that conversation seems remote — but appealing to at least one of the parties.

“Besides economies of scale in government costs, Bellevue would want to consolidate with Newcastle to acquire its world-class golf course and conference facilities,” she wrote. “Most cities, like Bellevue, have grown their land mass by annexation of unincorporated territory, which carries a different name and is a different legal procedure.”

Bellevue has not released public comment on the discussion.

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