Based on a land annexation that's expanding the city's tax base, Beaverton Mayor Dennis Doyle is proposing a 5-cent property tax reduction per $1,000 in assessed value for residents in the city's proposed 2011-12 budget.

For the average homeowner of a $289,000 house with a tax-assessed value of $207,000, that translates to a $10.35 savings.

Doyle's plan would reduce the city's projected property tax revenue to the general fund by $376,262. That amount would be offset by 92 acres of voluntarily annexed land that increases Beaverton's assessed valuation by $28.5 million.

Doyle, whose proposed $174 million budget maintains 29 percent in reserve funds, said it simply makes sense to pass along benefits of an expanded tax base to city residents.

'Having a larger tax base actually allows us to have the conversation about reducing the tax rate,' he said. 'We want to spread that savings to city residents. It's a pretty simple equation.'

While maintaining city reserves of 29 percent, the administration proposes an increase in the capital outlay and capital improvement program from $520,000 in 2009-10 to $1.2 million, one of the highest levels in several years.

Doyle's recommendation includes $821,000 for strategic property purchases for the city's land banking program and $230,000 to construct a parking lot at First Street and Main Avenue.

Doyle touted other aspects of the proposed budget, including continued funding for the Murray-Scholls library branch, enhancing law enforcement and community policing, and expanding business assistance for retention and expansion efforts. The budget committee will meet for the third and final time tonight (Thursday) at 6 p.m. in City Hall, 4755 S.W. Griffith Drive.

The mayor vowed to continue commitments to Beaverton's sustainability program, and - noting that a quarter of the city's population was counted as non-white in the 2010 census - embracing the city's increasing diversity.

Doyle emphasized his 5-cent tax reduction proposal is not negated or counteracted by higher city fees or foreseeable increases in expenditures.

'This is not smoke and mirrors,' he said. 'That's what's fun about this. I firmly want to see if (the city) can maintain' this level. 'I am not at all fearful of the impact of this reduction.'

However, not all city leaders agree with the timing of the proposal.

Calling the mayor's proposal mere 'feel-good' politics, City Councilor Betty Bode said she feels it's premature to adjust the property tax rate based on the anticipation of developing annexed property.

She also questioned the value of a reduced property tax when water and sewer rates were raised as recently as this year.

'This winter we were forced to raise the water rate on all the citizens,' she said. 'It sounds great to say you're reducing taxes, but you've already raised water and sewer rates.

'I would be for holding the (property) tax rate for what it is now, and see if development gets going and what happens with our water usage in the next year,' she added. 'Our usual revenue streams are way down. It would be more conservative to hold at our regular rates.'

Councilor Catherine Arnold called her colleague's equation of property tax with water and sewer rates - the latter of which are adjusted based on customer demand and use - an 'apples and oranges' argument.

'Water funding is for water services,' she said. 'The general fund comes from property tax increases. We have the authority to use (those funds) in different places. It's not a healthy thing to start subsidizing our general fund with water and sewer' rate increases.

Arnold said she supports the mayor's tax reduction proposal as long as it appears to be sustainable.

'We want to make sure it is something where, if we do it, it will hold, and we won't have to roll it back,' she said. 'I don't want to drop it a nickel, then find out next year we didn't get the (expected) money.'

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