The city of Post Falls has only raised property taxes once in 10 years. But most residential property owners still pay more in taxes each year.

It’s not a problem unique to Post Falls. Rising property taxes are pervasive in Kootenai County, as residential property values increase faster than the values of commercial and industrial properties. Homeowners are absorbing that shift in property values, while businesses often see a less dramatic rise or even a decrease in taxes.

Post Falls City Administrator Shelly Enderud facilitated a conversation with city staff Tuesday, deploring Idaho House Bill 409 that passed into the Senate last week. The bill proposes a one-year freeze on property tax rates and prohibits municipalities from collecting new growth or annexed property taxes. It’s a move that would negatively impact rapidly growing communities in Kootenai County.

Mayor Ron Jacobson has written several letters to legislators in Boise, explaining how the bill would harm Post Falls’ ability to expand services to its growing population.

In the same 10-year period that Post Falls only raised taxes once, the city’s population increased from 26,909 to 36,747, a nearly 37% increase.

“These new residents are entitled to, and demand, the same level of service as our more established residents,” Jacobson wrote. “While it has been a struggle to meet the additional demands for service and arrive at a balanced budget without additional tax dollars, we have done so to date, and we have largely been able to limit the impacts of the tremendous growth we are seeing on the tax bills of our existing residents. We have only been able to do this because of the ability to levy for new growth and annexations.”

Enderud argued that the bill does nothing to address the root cause of rising property taxes and simply aims to impede growth in booming counties like Ada and Kootenai.

“Rep. Mike Moyle sponsored the bill,” Jacobson said. “He feels there is a lot of new growth going on that is harming the state and thinks this will slow it. If we slow down growth or stop growth, it is simply not true that taxes will go back down. It will just impact municipalities’ ability to keep up with infrastructure.”

Warren Wilson, Legal Services director for the city of Post Falls, explained how several lobby groups don’t want to see the shift in property values addressed, including the Idaho Association of Commerce and Industry and the Idaho Farm Bureau.

“As a city we’ve been fiscally conservative,” Enderud said. “The steps the [legislators] are discussing really harm the taxing districts that have been fiscally conservative.”

Enderud continued that there are viable ways to stabilize property taxes without limiting a municipality’s ability to capture new growth tax to expand services to all residents. She laid out several alternatives to the bill.

The state Legislature could index the homeowners’ exemption, capped at $100,000 several years ago. The homeowners’ exemption exempts roughly half the value of an owner-occupied home from property taxes, but capped at $100,000, it has fallen far below the 50% value of most Idaho home values. A bipartisan bill to increase the exemption failed last year in the house.

Legislators could provide additional relief to certain property owners through the Circuit Breaker or Tax Reduction Program, assisting low income, elderly, widowed, disabled, and disabled veterans with tax increase limits. The amount of reduction is based on income for the previous calendar year. Currently homeowners’ property taxes may be reduced by as much as $1,320.

Enderud also said that legislators could place a cap on the percentage of taxable market value increase allowed from year to year.

The city of Post Falls wants to urge the state to consider these and other options to change their taxing methodology. And they want cities and local taxing authorities to have a voice at the decision-making table.

“The city would like to participate in an interim committee,” Enderud said. “We’d like to work with the Association of Idaho Cities and form our own task force to include other cities and taxing authorities in the area. A lot of research can be done. We are open to that discussion.”