POST FALLS — Merit raises of up to 3 percent, plus a cost of living allowance of 1 percent, are included in Post Falls' proposed fiscal 2017 city budget.

The pay hikes are among the reasons the city's proposed General Fund budget of $22.86 million is 11 percent higher than the current budget.

"We believe that we have put together a budget that provides a good level of service for the residents," Jason Faulkner, the city's finance director, said prior to Tuesday night's budget workshop with the city council. "Post Falls is definitely growing, and this budget will help support that.

"With the proposed pay increases, we want to be in the market, especially during these days of difficulty filling positions, but we also don't want to be at the top. We want to be fair to both the employees and taxpayers."

The public hearing on the budget is Aug. 16 at 6 p.m.

If all of the city's 154 General Fund employees were to receive the maximum 3 percent pay increase based on their annual evaluations — administrators estimate 90 percent do — and the automatic 1 percent COLA is approved, the total amount for the hikes is $413,011.

Under the proposed budget, street light fees will come off residents' monthly utility bills in October and be charged as a property tax in the future. The majority of city council was open to the change during the workshop.

All residents are currently charged $3.85 for street lights per month.

As a result of street lights coming off o utility bills as a fee, the owner of a $200,000 home will see a $12.14 decrease per year on their street lights, the owner of a $250,000 home an increase of $4.04 per year and the owner of a $500,000 home an increase of $125 per year.

Since street lights would become a tax rather than a fee, the differences in costs are due to the differences in home values and residents paying their proportionate share.

Since the council gave staff the blessing to proceed with changing street lights to a tax rather than a fee — and the fee would come off utility bills as a result — the proposed budget includes a 3 percent property tax increase of $282,742. The same amount will be taken from foregone taxes to pay for street lights.

"A total amount of $565,484 in property taxes will be needed in the General Fund to pay for street lights," Faulkner said.

Post Falls has taken one property tax increase — 2 percent in 2012 — since 2009. Cities and other taxing agencies are allowed to take up to 3 percent each year under state law.

Government watchdog Larry Spencer went in front of area cities during last year's budget season to make the argument that street lights as a fee on utility bills is not legal.

The city council last year decided to stay status quo, pending an Association of Idaho Cities review. When the organization didn't take a position, the topic came up for debate this budget season again.

The U.S. Supreme Court in 1974 distinguished fees from taxes in that fees are based on usage by individual homeowners as services funded by taxes that benefit the general public. Other cases reaffirmed that definition and some other cities, including Kuna near Boise, have already stopped charging a fee for street lights.

Warren Wilson, the city's attorney, suggested that the council make the change on the street lights as that seems to have the best legal standing.

"It will need to be done at some point; it's the trend across the state," he said.

Personnel requests in the budget include reclassifying a detective to detective sergeant, $4,418; one police officer, $75,345 (includes salary and all benefits); a senior parks and recreation worker, $57,168; recreation assistant, $26,811; and an engineering technician, $64,454.

Faulkner said growth, and consequently more work, prompted the requests.

Other large budget requests include: $180,000 for replacement marked police vehicles; $100,000 for four unmarked replacement police vehicles; $110,000 for a compaction asphalt roller; $100,000 to connect sidewalks to the Centennial Trail; $46,000 for traffic signal upgrades at Cecil Road and Mullan Avenue; $15,000 for police body cameras; $63,000 for community development software upgrades; and $124,000 for street reconstruction on Spokane Street from Poleline to Grange.

The city is planning for an 18 percent ($292,000) increase in employee insurance costs.

Faulkner said a total of $3.86 million "wish list" budget requests were received by department heads citywide, but he's recommending to the council that $1.4 million be funded. He said $633,000 is already available for those items as a result of carryover funds from fiscal 2015.

Faulkner said earlier-than-normal and collaborative budget talks among department heads worked well with helping shaping the proposed budget this year. He said new construction continues to be strong, which helps the city's budget.