Seattle's strong economy - buoyed by technology, medical research, construction, vibrant retail sales, foreign trade and more - is the envy of municipal finance directors of U.S. cities plagued by dying industries, decaying infrastructure and falling housing prices.

But not all is as it seems. A provocative policy brief issued by the Washington Research Council warns of municipal revenue shortfalls that could slow Seattle's development, in terms of city services, infrastructure and cultural amenities. Despite South Lake Union development and other private investment, storm clouds are on the horizon, warns Kriss Sjoblom, the report's author.

Sjoblom's thesis is simple: The suburbanization of the King County economy, coupled with Seattle's oppressive business tax policy, may rob the city of its fair share of the region's economic growth.

The time for action is now, during flush economic times. A coalition of business and civic leaders, elected officials and residents needs to act to ensure that Seattle remains a pre-eminent place for business to thrive and prosper.

Spending pressures caused by inflation, public safety demands, an unsustainable state budget and spiraling costs for health care, pensions and wages make city finance a complex issue - one that requires the best thinking of the best minds. The city has escaped, for now, the recessionary influences of the housing collapse. The community should seize this opportunity to ensure a sound fiscal future based on fostering economic growth and wealth creation.

CEOs, influenced by the fact that nearly two-thirds of Seattle's tax base comes from private enterprise and commerce, find it far too easy to opt for the more business-friendly confines of Bellevue, Bothell, Issaquah, Kirkland, Redmond or Renton - cities that form a crescent along Lake Washington's eastern and southern shore.

Sjoblom, vice president of research and an economist at the research council, sums it up: "Taxes matter when businesses decide where to locate. This is particularly true for decisions about where to locate within a metro area, where the competing locations all have access to the same pool of labor."

He offers some startling findings:

- Seattle collected $449 in business taxes and fees per private sector employee in 2006, nearly twice the $245 collected in Bellevue, the second-highest tax-and-fee city.

-Three business taxes - gross receipts tax, square-footage tax and head tax - are assessed by one or more of the seven cities. In 2008, Seattle will become the only city to levy all three.

-Three cities, Seattle, Bellevue and Issaquah, impose B&O taxes. In Seattle, a rate of 0.215 percent of gross receipts is applied to retail, wholesale, manufacturing, extracting, printing and publishing; 0.415 percent of gross receipts to service and other sectors. Bellevue's rate is 0.1496. Issaquah's rate is 0.10 percent on services and real estate and 0.08 percent on other businesses.

-Bellevue applies a tax of 82 cents per square foot for business activities not assessed under the B&O tax. In 2008, Seattle will assess business activities excluded from the city's B&O tax at $1.56 per square foot for office, retail and production space and 52 cents per square foot per year for space with other uses.

-Six of the seven cities (Bellevue is the exception) tax electricity, gas and telephones at the maximum 6 percent allowed under state law. For other utilities, Seattle rates range from 10 percent for cable television to 15.54 percent for water. Suburban city rates are considerably lower for cable and water, typically 6 percent, according to the report.

Suburbanization, which began in the early 20th century, continues to shrink Seattle's regional population dominance. In 1910, nearly 85 percent of King County residents lived in Seattle. By 2007, the number had shrunk to 32 percent.