By Paige Cornwell Seattle Times staff reporter

MEDINA – Within the gated estates that line this city’s leafy streets live the richest of the rich.

People with names like Gates, Bezos and Nordstrom call the waterfront enclave home, helping burnish Medina’s image as the heart of Lake Washington’s “Gold Coast.” The city has 3,200 residents, a smattering of businesses and a citywide, 24-hour surveillance system that belies the community’s appreciation for privacy.

But for Medina, all that glitter has not translated to municipal gold.

The city of sprawling, multimillion-dollar mansions is projecting a $500,000 deficit in 2020, which Medina officials say could widen to $3.3 million by 2025 without a hike in revenue from property taxes.

Medina’s budget woes mirror other cities across the state that are grappling with a limit on how much a city can ask of its taxpayers, but it’s uniquely felt in one of the country’s richest ZIP codes.

The world’s two wealthiest people help illustrate the situation. Medina residents Bill Gates and Jeff Bezos each have a net worth 15,000 times the city’s annual $6.9 million budget, but Medina collects a combined $139,826 in property taxes on their lakefront homes.

“The wealth of the citizenry does not translate into the wealth of the city government,” says Julie Ketter, Medina’s finance director. “People in Medina pay a lot of property tax, but most of it doesn’t go to Medina.”

A measure on the November ballot is designed to change that. Medina voters will decide whether to approve a six-year levy increase that the city says will fill the deficit and maintain its current level of municipal services. The measure would increase the city’s levy rate by 20 cents, to 84 cents per $1,000 of assessed value in 2020, and additional increases of 5% each year until 2025.

$2 million value is typical

Medina has no shortage of fabulously pricey homes. Tech luminary Charles Simonyi owns the 22,190-square-foot “Villa Simonyi,” valued at $56.9 million. Former Microsoft president Jon Shirley’s $42 million home-cum-art gallery sits on 4 acres along the waterfront. Susan Brotman, wife of the late Costco co-founder Jeff Brotman, lives in a $26 million mansion that was the site of a private fundraiser for President Barack Obama in 2012.

But city officials are quick to point out that the majority of Medina homes are valued at around $2 million, making the pricey mega-mansions outliers. If the ballot measure is approved, a Medina taxpayer who owns a $2 million home would pay $1,680 to the city in 2020, an increase of about $400 from what he or she paid to the city in 2019. With the 5% increase, the amount paid each year from the levy lift would go up to $420 in 2021 and $441 in 2022.

Meanwhile, opponents question the city’s past spending and say that they are already taxed too much. One longtime resident calls the proposed levy a “Hail Mary” designed to squeeze more money out of residents while failing to curb municipal spending.

How did they get here?

At 64 cents per $1,000 of assessed value, Medina’s levy rate is among the lowest in the state. Bellevue’s, for example, is 92 cents and Redmond’s is $1.15.

Medina, which has an operating budget of $6.4 million, will bring in about $2.8 million from property-tax income this year. If the measure were approved, the city would generate an additional $900,000 in 2020.

More than half of the city’s budget goes toward public safety services, like the police department, lifeguards and municipal court. The fund pays for 25.5 staff positions, 11 of which are in the police department. The city contracts with other cities for some services, such as the city of Bellevue for fire and medical aid and the city of Seattle for harbor patrol.

Under state law, cities can’t raise property-tax levies beyond 1% each year unless approved by voters. With a 1%  increase, Medina would bring in an additional $28,000 next year, which it says isn’t enough to cover rising costs. Because the city is largely residential, few retailers provide sales-tax revenue, and the city has already increased its utility taxes to the maximum amount allowed. Its contingency fund is depleted, the city said.

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Medina isn’t the only Eastside city to face a similar situation. Last November, a similar measure failed in Mercer Island. That measure would have increased Mercer Island’s property-tax rate to $1.24 per $1,000 of assessed value; 42% voted for it. The city has since cut $2.35 million of dollars from its youth and family services department, as well as its parks and recreation department. Mercer Island eliminated its lifeguard program, canceled the annual community Summer Celebration and slashed some of its senior services.

Medina’s cuts, too, could mirror Mercer Island’s.

“We’ve run out of all the cost-saving measures and reserves that we can,” Ketter said. “It’s up to the community to decide where we go forward.”

Critics say the budget woes are self-inflicted and that proponents don’t take into account the total tax that homeowners pay each year. The owner of a $2 million home, for example, pays about $16,000 annually in taxes that go toward schools, King County, Sound Transit and other jurisdictions. The wealthy outliers, Bezos and Gates, pay a combined $1.7 million annually in property taxes, which includes what they pay to Medina.

“We have a population that’s diverse, with elderly people and people in working households, and then clearly the two richest men in the world, and everyone looks at that and the fancy houses on the lake, and they’re not wrong. But on the other hand, for the state, county and now the city to ask more and more from us is not sustainable for many of us,” said Medina City Councilmember Jennifer Garone, who was a “no” vote when the City Council voted earlier this year to put the measure on the ballot.

Potential service cuts

Aside from their tax bills, residents wouldn’t notice any differences if they approve the measure — and that’s a good thing, Ketter said. The city isn’t trying to add “fancy services or gold-plated cars,” she added.

“I think that people can choose to continue to pay for their level of services they enjoy now, or they can choose to ask us to cut that back,” Deputy Mayor Jessica Rossman said at a meeting earlier this year. “ … If I were a resident and I had moved to Medina, as I did, for the quality of life, I would be annoyed with the council that made the decision to make a bunch of cutbacks without asking me if I wanted them first.”

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If the measure is rejected, the city would do away with some services, though it’s unclear what would be cut. The City Council is finalizing its two budgets, one that includes the additional levy funds and a second that reflects the status quo. The Medina City Council will host a public hearing Oct. 14 on the 2020 budget.

Some of the potential cuts are substantial, like cutting harbor patrol enforcement to save $70,000, and the lifeguard program for $44,000. Others are smaller, like cutting “shredder days” for $2,527 and the refreshments budget for city-related meetings by $2,000. Layoffs among city staff are also possible, though the council has directed finance staff to find other cuts to maintain the positions.

“Do I like that they would get rid of the lifeguard program? Absolutely not. Do I feel comfortable that we would get rid of the harbor patrol? No,” Garone said. “But you look for the easy and sometimes the more painful and obvious things.”

Wilma Edmonds, a longtime Medina resident and a City Council member in the 1970s, described the measure as the city’s “easy way out.”

“My initial reaction was that it was unfortunate that the council was attempting this Hail Mary instead of seriously curbing spending and being responsible fiscal stewards of the city,” Edmonds said. “It is the easy way out to force yet another tax hike on residents as opposed to making tough but needed budget cuts.”

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