A proposal introduced last week by Gov. Gregoire could result in millions of dollars in lost revenue to cities in Washington – including Bellevue, city officials said Monday.

Gregoire’s proposal would change the way Business & Occupation (B&O) taxes are collected. The end result, however, would be lower revenue and a reduction of crucial services in Bellevue, according to the city.

City officials estimate the proposal would cost Bellevue from $1.6 to $6 million annually in lost revenue, depending on how the legislation is structured. That could result in dozens of layoffs and affect a range of city functions, including programs that help people in need, public safety, transportation and parks.

“This proposal is a bad idea. It takes needed revenue away from our city by removing local control and putting control in the hands of the state,” said Mayor Conrad Lee. “The governor’s plan would hurt real people and it would not help small businesses in Bellevue.”

Bellevue, like most cities across the state, has been hard hit by the economic downturn. In response, the city reduced its 2011-2012 general fund budget by about $18.6 million, or 6 percent, compared with the 2009-2010 budget, resulting in a reduction of 81 staff positions since the beginning of 2011.

In addition, the governor’s proposed changes could make the B&O system statewide more, not less, complex and impair the city’s ability to help local businesses. Currently, 82 percent of Bellevue businesses are exempt from the B&O tax and don’t even need to file a return because their gross receipts are $150,000 or less.