COEUR d’ALENE — The city of Coeur d’Alene is seeking a 1 percent cost of living increase for its 300-plus employees.

If approved, the pay increase would equal $212,317, spread out over its 353 full-time equivalent positions, and must be agreed upon with the city’s three unions.

Meanwhile, the city is seeking a 1.5 percent increase in property taxes — a $237,675 increase.

But one does not have to do with the other, officials said, as the city is contractually obliged to give a 3 percent cost of living increase to its employees every year, while the property tax revenues go toward capital purchases.

“Why don’t you say no to a COLA?” said Troy Tymesen, city finance director. “Well, we can’t. We really can’t because of the contracts.”

Also, employee morale could be at stake.

Last year, the city negotiated with its three unions to forego a COLA increase on account of the strapped budget with the condition that the city avoid layoffs, which it did.

This year, the city found a little wiggle room in personnel expenses to offer a slight increase.

“We felt like we needed to be able to offer something this year,” said Wendy Gabriel, city administrator, on the 1 percent offer this year, as opposed to repeating last year’s negotiation. “We felt that honoring the contract was important, and employee morale was a concern.”

Gabriel said when the city began negotiations this year with the three unions — The Coeur d’Alene Firefighters Local 710, the Lake City Employees Association, and the Coeur d’Alene Police Association — the city thought that it wouldn’t be able to offer anything again.

But the city was able to save $640,000 this year in personnel costs through early retirements, freezing vacated positions, and funding some positions with federal grant dollars, among other moves.

That allowed for the 1 percent increase to be offered, weeks before the city began discussing the 1.5 percent property tax increase.

Gabriel said the timing of the raise — when other businesses are laying off or not raising — was a concern. But honoring the contracts and keeping morale up trumped that, and the negotiations were under way four to six weeks before the request for a property tax increase.

“It was a big consideration,” Tymesen said of the two requests. “Council struggled at that mightily.”

But, Gabriel added, negotiating the 3 percent contracts down to 1 percent could ensure the city avoids layoffs. If the unions didn’t agree to negotiate, and demanded the 3 percent bump, the city would likely have to “reorganize” staff, she said.

“What they get in return is that people’s jobs are safe, and that’s important to them,” she said of the deal.

Two of the three unions have tentatively agreed to the arrangement, while the police association is expected to sit down with the city next week. The contracts with the city are two or three-year agreements, and all three unions are mandated. The fire union is a state requirement, and the Lake City and police associations were approved by voters to represent city employees in a 1999 citywide vote.

And the property tax request, if approved when the proposed $77.9 million budget is up for adoption Sept. 3, is geared to go toward capital expenditures.

Last year, the city didn’t ask for a property tax increase, and removed all capital expenses from its budget as well. This year that money would buy a couple of police cars, and new higher frequency radios the police department has one year to replace under a new state requirement, as well as other equipment.

“We’re not sustainable with zero capital,” said Jon Ingalls, deputy city administrator, on the city proposing to reintroduce capital expenses this year. “We were lean the year before, and at zero last year.”

Both the COLA amount and the capital expenditures would come out of the city’s general fund. That $29 million general fund — 85 percent of which pays for benefits and wages — also pays for capital expenditures, services and supplies.