RALEIGH - City Manager Russell Allen proposed Raleigh's largest tax increase in more than a decade Tuesday, just minutes after the City Council voted to more than double many of the impact fees it charges on development.

Allen's $642 million budget would raise Raleigh's tax rate by 5 cents to 38.17 cents per $100 of property value -- about a 15 percent increase. That would boost the tax bill for a $250,000 house by $125 annually, not including the increase that homeowners may face as a result of revaluation.

Allen's recommendation came a day after Wake County Manager David Cooke proposed a 2.5 cent increase in the county tax rate.

Allen told the council that the increase is necessary because of a confluence of factors, including a struggling economy, rising fuel costs and Raleigh's need to expand city services and move forward on a number of expensive projects.

Allen's proposal also calls for a 15 percent increase in the water and sewer rate, which would amount to a $4.86 monthly increase for an average household that uses about 6,000 gallons a month, and a $5 increase in the vehicle decal fee to support new public transportation services.

Half of the proposed 5-cent property tax increase would go toward paying debt service on several big-ticket items: the $88.6 million parks bond that was passed last fall, the $226 million public safety center planned for downtown and a new $223.5 million remote operations center.

Despite a countywide property revaluation last year that raised the tax value an average 43 percent, Allen said keeping Raleigh's property tax rate the same is not an option, since the downturn in the nation's economy has reduced the city's sales tax and inspection fee revenues by $5 million. The economic climate has also lowered projections about how much revenue the city will collect in the near future.

Compounding Raleigh's revenue shortfall are rising fuel prices, which have increased by 44 percent and cost the city an additional $1.7 million.

Allen has earmarked $4.7 million to hire more staff and buy additional equipment. Public safety would get an additional $3.2 million to increase the starting salaries for police and firefighters by 5 percent, add 12 additional police officers and pay for the construction of a new fire station.

Though the current economic downturn was a frequent theme of Allen's budget presentation, it did not have any effect on the council's decision regarding impact fees.

Only Councilman Philip Isley opposed the council's decision to substantially raise the fees the city levies on new development to help pay for roads and parks.

Mayor Charles Meeker has said the fee increases, which go into effect June 1, could bring in an additional $7 million to $8 million annually. Under the new fee structure, fees on a single-family house of 2,000 square feet will go from $528 to $1,386; on a multifamily unit will go from $322 to $925 per unit; on churches, from $232 to $865 per 1,000 square feet.

In defending their decision, supporters said Raleigh's impact fees remain competitive.

"I don't think it's out of line with what other municipalities in the area are doing," Councilman Russ Stephenson said.

Mayor Charles Meeker said he was not willing to delay a policy that has been under consideration for several years.

"There's never a good time to raise taxes and fees," Meeker said.