The Coeur d’Alene City Council on Tuesday, by a 5-1 vote, approved a 2025-26 budget of $151.9 million. 

It includes the allowable 3% property tax increase to generate $835,383 and 1% of forgone taxes that will bring in $290,146. 

Councilors said they did not want to raise taxes but had no choice. 

“Clearly, we’re dealing with a deficit and we’re going to have to move forward,” said Christie Wood.

"Nobody wants to raise taxes," Kiki Miller said. "Nobody wants to do that."

Councilor Dan Gookin was the lone no vote. He said about 40% of city residents are on fixed incomes and he couldn’t support a property tax increase. 

“I think we could do more to cut,” he said. 

The city projects it will receive $27.1 million in property taxes, which account for 48% of its operational revenue. 

Katie Ebner, finance director and treasurer, said a residential home with a taxable value of $600,000 will see a tax increase of about $1.25 a month.

The budget calls for using $1.8 million from the general fund balance, leaving a projected $11.2 million unassigned fund balance at the end of fiscal year 2026 — about 19% of general fund expenditures.  

The Government Finance Officers Association recommends a fund balance of 25%.

“We're getting closer to the unhealthy levels of fund balance if we follow this trajectory,” Ebner said, adding she was concerned the city was “dipping into that fund balance year after year without an easy way to hit the brakes.” 

General fund expenditures total $58.7 million, which includes $21.4 million for the police department, $15 million for the fire department, $7 million for streets and engineering, $3.2 million for the parks department, $3.1 million for municipal services and $1.9 million for the finance department. 

The budget also includes a 3.5% wage increase for the fire department and non-bargaining employees. A 3.5% wage increase has been tentatively agreed upon with the Lake City Employees Association. 

City Administrator Troy Tymesen said the city is negotiating with the Police Officers Association for a one-year contract and has offered a 3.5% raise. They plan to meet next Tuesday. 

Ebner said that in 2019, the city employed 401 people with a population of 52,393. Today, it employs 421 people with a population of 56,894.

“We have become more efficient in serving our community,” she said. 

The City Council and Mayor Woody McEvers declined to accept raises. 

“I think that’s great,” Gookin said. “That's a good message to give to the public."

Raising property taxes was a point of concern for the council.

“The tax increase is incredibly tough, and I don’t want to do it at all,” Kenny Gabriel said.

Councilors said they want to continue working on the budget, hold another workshop and can amend it. 

"The budget process is something we should do all year long,” Gabriel said. 

Wood agreed. 

“We just have to keep after it," she said.

Councilor Dan English said the increase in property taxes and taking forgone taxes were necessary steps. He said there were years past the city should have raised property taxes or taken forgone taxes, but didn't.

“I don’t apologize whatsoever for supporting the 3% and 1%,” he said.  

Ebner said the city is facing financial challenges. 

Tax revenue from new construction and annexation has decreased by over 70% since 2016, primarily due to state legislative changes and rising assessed property values in the city, according to the budget presentation. 

New growth tax revenue is capped based on a preliminary levy rate. 

“As assessed values increase, levy rate decreases. This reduces the funding to be captured from new construction each year and compounds over several years," according to Ebner's presentation.

The entire valuation of the city is estimated at $11.9 billion.

The city is also limited to taxing only 90% of the new construction value, “further constraining revenue growth.” 

According to Ebner’s presentation, Coeur d'Alene had $93 million in new construction evaluations on the tax rolls this summer but that created just $202,000 in revenue. Before the legislative changes aimed at property tax relief, it would have been about $500,000.

Ebner said the lesser amount isn't nearly enough to pay for the growth in terms of streets, public safety and staffing services it will require.

"It's very easy to get behind on revenue when that money is not coming in year after year," she said.

The fiscal year begins Oct. 1.