Coeur d’Alene property owners can expect to pay more in city taxes in the upcoming fiscal year under a proposed $97.3 million budget that includes a 3% tax hike.

It’s the first tax increase the city has taken since 2017, when it raised taxes 2.5%.

Mayor Steve Widmyer said a major factor in the proposed tax increase was employee wages.

“A vast majority of the city’s budget is personnel costs, and we have seen those increase due to the labor market — especially in the areas of public safety,” Widmyer said. “We are in direct competition with Spokane for public-safety positions, and that has resulted in our wages increasing in order to attract and retain quality employees.”

City Administrator Troy Tymesen said the fiscal 2020 budget included a 2.5% across-the-board cost of living raise for the city’s 403 employees and an additional 1% increase for public-safety positions. Combined, those raises total slightly more than $800,000.

Under the proposed spending plan, the city’s levy rate would drop to $4.64 per $1,000 of assessed valuation, down from $4.97 per $1,000 last year.

The budget is about $6.7 million higher than last year’s adopted $90.6 million spending plan. Tymesen said the 3% tax increase — the maximum allowed by state law — would generate $655,361 in new revenue for the city.

Despite a lower tax rate, Coeur d’Alene property owners can expect to pay more as valuations continue to skyrocket, officials said.

Kootenai County Assessor Rich Houser said total property valuation in Coeur d’Alene rose from $4.43 billion in 2018 to $5.18 billion this year. That represents an increase of nearly 14.5 percent.

Soaring valuations have been a trend for several years, Houser said.

“We’ve seen an increase every year since we came out of the recession (in 2010) and this last year was a fairly significant increase,” Houser said.

The current Coeur d’Alene valuation of almost $5.2 billion is nearly double the 2012 valuation of $2.69 billion.

Tymesen said any valuation increase of over 5 percent would offset the lower tax rate resulting in higher taxes. And while the valuation increases in Coeur d’Alene average 14.5 percent, Tymesen said some residential property owners could realize an even higher increase.

As proposed, the budget includes 2.74 new full-time equivalent positions in the wastewater and parks departments. A new school resource officer is also in the budget, which will increase the total number of sworn officers in the Coeur d’Alene Police Department to 91.

In recent years, the city has realized cost savings in personnel by not filling the deputy administrator position, which has been vacant since February 2017, saving taxpayers $98,878 annually in wages and benefits.

Another $80,000 per year was saved by reorganizing the finance department when Tymesen, the former city finance director, was named to the city administrator post in January 2018. His position was filled with a staff accountant who earns less.

The proposed $97.3 million budget is the “high-water mark” that can be reduced by the City Council but not increased before the 2020 spending plan is adopted, Tymesen said.

Widmyer said city officials were always looking at ways to hold the line on spending.

“The city works very hard to provide quality services to its citizens,” the mayor said. “In doing so, we understand that it’s our obligation to our citizens that their tax dollars are spent efficiently and wisely.”