COEUR d'ALENE - The city of Coeur d'Alene on Tuesday adopted a $77.8 million budget for fiscal year 2014.

The budget won't seek a 3 percent property tax increase, but does ask for property taxes on new growth inside city limits.

The budget is $5 million bigger than the current fiscal year's financial plan, an increase City Finance Director Troy Tymesen attributed to a growing city.

"Growth is the key," he told the City Council, which approved the plan 4 votes to 2. "This is an amazing financial plan during these economic times."

The valuation that new growth has brought into the city is approximately $93.6 million, which would bring in $600,000 of new property tax revenue. Another example of the new growth are building permit revenues, which are up 42 percent. And by not seeking a 3 percent increase from last year's property taxes, which cities are authorized to take, the city won't take $524,000 as part of the plan.

The fiscal year begins Oct. 1.

Included in the outlook are a number of capital expenses, which the city had scaled back in previous years because of the economy.

Now, it's budgeting for two new police vehicles, and a lease agreement for four front loaders for the street and water departments. Wastewater tank trucks and a tractor, mower and sweeper in the parks department are a part of the plan.

"This has been a rugged few years in this economy but the demand for services hasn't decreased," said Mike Kennedy, councilman, adding that the city can afford capital purchases "without using any of the 3 percent tax increase."

That "is a big thing," he said.

The plan also calls for a 2 percent Cost of Living Increase for employees, merit pay for employees and seven more full-time equivalent positions.

The COLA amounts breaks down to roughly $500,000 for city employees, and merit pay equals about $300,000.

City Councilman Dan Gookin made a motion to drop COLA and merit increases for department heads, and put that amount toward property tax relief.

That motion failed 4 to 2, with Gookin and Councilman Steve Adams supporting it. Adams and Gookin often vote similarly, but the motion also drew harsh criticism from Kennedy, who is frequently on the opposite side of the political fence from the former two.

"Hi everyone, this is an election year," said Kennedy, who then addressed Gookin. "I think your motion is pure, unadulterated politics and I reject it. And I think it's the wrong way to govern a city by pitting people against each other."

"Then explain to me McEuen," Gookin responded. "Why didn't we allow a public vote? That did more to split this community than the motion I just made."

After the meeting, Gookin said department head salaries have been a closely followed topic of late, and said his motion was "worth a shot."

Adams and Gookin also voted against the financial plan. Kennedy and council members Deanna Goodlander, Woody McEvers and Ron Edinger voted in favor.

The 7.6 full time equivalent increase in personnel would be to match increased demand for services, Tymesen said. The city hasn't added positions since the recession, and four police officers would be added with the help of grants. The building department would add two positions, one being an electrical inspector.

The city of Coeur d'Alene does not set levy rates.

But given the numbers, a $181,000 home in Coeur d'Alene with the same valuation which also uses the $81,000 home owners exemption would pay $682 a year in property taxes using the current levy rates. That would be a $5 increase from this year.

By forgoing the 3 percent property tax increase, the city's forgone tax amount increases to $3.1 million. Forgone property taxes are dollars cities could have collected, but didn't.