RATHDRUM - The Rathdrum City Council settled on a 1 percent property tax hike while approving its fiscal 2009-10 budget on Tuesday night.

The council had considered an increase as high as 1.5 percent. Cities are allowed to increase taxes up to 3 percent.

"The council decided to lower the tax increase in support of KTEC (the future professional-technical school in Rathdrum)," City Administrator Brett Boyer said.

Voters in Lakeland, Post Falls and Coeur d'Alene will decide a levy proposal for the school on Tuesday. Boyer said the council recognized that taxpayers would see another increase with that proposal if it passes, so decided to lower its tax hike.

Rathdrum's tax hike will mean about a $7 per year increase for the owner of a $250,000 home.

The city's total General Fund budget will be about $4.3 million, which is about $500,000 less than the current year.

The tax increase will generate about $18,000 for the city. The money will be used for improvements to the new Majestic Park, an 11.9-acre site in the southeast part of the city east of Meyer Road next to the water tower.

A spokesman for Rathdrum's Gem Committee who spoke in favor of the budget also praised the council for supporting Majestic Park.

About $240,000 total will be spent on the park for initial improvements.

Boyer said the budget moves the city ahead with needed projects, but respects the economic situation as it has in the past three years.

The city had no increase three years ago, took a 1.92 percent increase two years ago and 1.9 percent last year.

"Historically, we've kept increases to a minimum," Boyer said. "We try to hold steady, be conservative and not be all over the board."

The budget also includes a 2 percent pay increase for employees. More than $200,000 was budgeted for road improvements. Sidewalk improvements with lights and trees on Second Street in front of the old restored jail is also planned.