* Town's legal bills mount over lawsuits
* Leaders to finalize plan Tuesday
By Laura L. Myers
SEATTLE, July 12 (Reuters) - A Washington state town founded a century ago as a gold prospectors' camp in the foothills of the Cascades Mountains may ask residents to consider disincorporation to avoid having to file for bankruptcy, its mayor said on Thursday.
Mayor Joe Beavers said the town of Gold Bar would otherwise spend roughly a sixth of its $550,000 general fund, or about $90,000, out of a total $1.4 million annual budget, to defend itself this year against a slew of mostly recall and public records lawsuits.
"We're going broke winning lawsuits," said Beavers, 69, a retired engineer who moved from Texas five years ago and earns $3,600 a year as mayor.
Of 15 lawsuits filed since 2009 - all but three filed by the same person - several tried to recall Beavers as mayor or attempted to unseat two other city council members while most of the remainder were public records suits.
"We've already spent $65,000 this year, and $90,000 is optimistic," Beavers told Reuters, adding that the town had to pay a private law firm to defend the suits because it does not have a city attorney. "We will have insufficient money to pay our obligations."
Gold Bar, which has 2,100 residents, was founded in September 1910, two decades after a miner discovered gold in gravel along the Skykomish River, today known for white water rafting 50 miles northeast of Seattle.
Town leaders are slated to finalize Tuesday whether residents will vote in November to disassemble Gold Bar's government or pay higher taxes in an "excess levy," at a rate equal to $200 for a home assessed at $200,000. That would raise about $113,000.
If voters reject both options, the town would file for Chapter 9 bankruptcy, Beavers said. He declined to say which option he viewed as the most likely outcome.
Gold Bar is the state's only town in the last four decades that could allow voters to consider disincorporation, Candice Bock, a legislative and policy advocate for the Association of Washington Cities, told Reuters.
A petition signed by about 150 Gold Bar citizens blames disgruntled residents using the state's Public Records Act "to flood our city with multiple large requests that accomplish nothing."
Attorney Anne Block, named as plaintiff in a number of lawsuits filed against Gold Bar, did not immediately return calls by Reuters. Block's Seattle attorney, Bill Crittenden, said he filed one public records suit on behalf of Block in February 2009 over why a city maintenance worker was fired.
Before Beavers came into office, Gold Bar "had a mayor who was running the city on a Blackberry and using a private AOL account for city business. In 2008, that should not have been done," Crittenden told Reuters.
The city's call for disincorporation was "very unusual", said Pat Mason, senior legal consultant for Municipal Research and Services Center in Seattle. Only five other Washington cities have dissolved their incorporations, Mason told Reuters.
Westlake, with a population of 440, disincorporated in 1972, and Elberton, population 62, did so in 1966, as did three other towns during the 1920s and 1930s, Mason said.
Two other small Washington towns also face a deep budget crisis. Mesa, population 500 and located 200 miles southeast of Seattle, faces a $230,000 judgment over public records that remains in litigation, Clerk-Treasurer Terri Standridge told Reuters on Thursday.
Normandy Park, a Seattle suburb with a population of 6,350, will ask citizens to raise $331,000 by lifting a levy lid in November. (Editing By Cynthia Johnston; Desking by Cynthia Osterman)