COEUR d’ALENE — Several Coeur d’Alene City Council members Tuesday questioned a 3% property tax increase in the city’s proposed 2023-24 financial plan.

Councilman Dan Gookin suggested that instead, the city use $1 million it received as part of the agreement with the Kootenai County Land Company when it approved the annexation of the Coeur Terre development earlier this year.

“That’s the decision I would like to make,” he said during the City Council meeting in the Library Community Room.

Councilwoman Christie Wood said she would consider using the annexation fee funds, as well as using money from the general fund, to avoid raising property taxes.

“I’m not opposed to a tax increase to keep the city services moving forward, especially when it comes to public safety, but if there’s a way we don’t have to, I’m obviously going to look at that, too,” she said.

Comptroller Vonnie Jensen said she would not recommend using the annexation fees or using general fund money, as it would lead to future shortfalls.

She said the city could take 3% property tax increase this year, next and the following year to keep pace with increases in wages and benefits for city staff, fire and police.

Gookin disagreed.

“I just don’t like beating up the taxpayer that way,” he said.

“Unfortunately you have benefit and wage negotiations that have been approved and have to be funded somehow,” Jensen responded.

The council, in a 5-1 vote with Gookin voting no, approved setting a public hearing for Sept. 5 and setting the high-dollar amount of $130.5 million in expenditures.

The proposed budget includes a 3% property tax increase that would generate $767,514, a city report states.

Councilman Dan English said property tax relief should be coming from the state and could balance things out.

Gov. Brad Little recently announced that Idaho ended the fiscal year with a budget surplus — an extra $100 million for property tax relief.

That means Idaho property taxpayers will receive about $300 million in relief this fall after the passage of a property tax cut measure during the 2023 legislative session, according to the governor’s office.

It has not been determined how much relief from the state property owners will receive.

“That’s something I would like a little more clarification,” English said.

Council members asked if there was an opportunity to have a special workshop to discuss possible spending reductions before the Sept. 5 hearing.

“We’re all going to have to work on this between now and then to decrease it,” Wood said.

“I feel like there should be more time to delve into this,” Miller said.

City administrators said the declining levy rate due to the city’s rising valuation is part of the problem, and has reduced new growth revenue.

The most recent Coeur d'Alene valuation came in at $12 billion.

"In the last 10 years, the city has jumped in value by almost $9 billion dollars," Jensen said.

"This jump and some changes that the Legislature has made is what's causing new growth to generate less each year," she added.

Jensen noted that the city is receiving less in new growth in the new budget than it has in the past 10 years.

The city received as much as $864,245 in new growth in 2016-17.

"As the valuation goes up, the levy rate that the valuation is multiplied by drops," she said.

Jensen pointed out that in 2014-15, $105 million in new growth generated $670,000 in tax dollars for the city.

But for fiscal year 2023-24, new growth of $101 million is projected to generate only $224,239.

“You have grown your city and doubled it in value,” said City Administrator Troy Tymesen. “Your levy rate dropped like a rock coming down from an 11-story building."

Tymesen said they would be happy to meet with the City Council and Mayor Jim Hammond to talk about the budget.

“But from our desk, all of your ongoing expenses are tied up into awesome contracts for our team members,” he said.

Jensen told the council that per contract negotiations with the Lake City Employees Association, bonuses totaled $550,502 in the next fiscal year, and the cost-of-living-adjustment to 5% from 4% would cost the city $183,931.

Miller said reductions may be necessary.

“Maybe we have to look at programs and positions," Miller said.

Jensen said what has helped the city balance the budget in years past is some departments, such as police, were not fully staffed.

Hammond said he would work with Tymesen to see if a special workshop could be scheduled.