Coeur d’Alene city officials and department heads might be heading into the next fiscal year operating with a deficit of about $3.1 million.

To brace for the upcoming shortfall, City Finance Director Katie Ebner said Monday that the city would need to increase the residential property tax rate by $7.84 per month in fiscal year 2027. 

Coeur d’Alene’s current property tax rate is $2.57 per $1,000 of taxable assessed value, which helped generate nearly $27.32 million in revenue this fiscal year alone.

Mayor Dan Gookin asked fellow council members if increasing city property taxes by 7% is necessary. 

“Mr. Mayor, we don’t have a choice,” Council member Kenny Gabriel responded.

The main driver behind this deficit is two-fold, according to city officials. 

As rapid population growth continues to hit Coeur d’Alene, adequate construction revenue has not kept up with construction value. In other words, despite a 35.6% population increase between 2010 and 2023, according to the nonpartisan civic database USA Facts, the city collected only $201,000 in construction revenue last year, even though it saw $84 million in new construction value.

How this came to be: in 2021, the Idaho Legislature voted to place an 8% annual cap on revenue growth for all local government budgets. Called House Bill 389, it was introduced by Idaho Speaker of the House Rep. Mike Moyle to prevent “runaway municipal spending.”

Gookin said Monday that the state is “at war with local control and local cities.” Council member Dan Sheckler echoed that sentiment, saying, “It’s unfortunate the Legislature has our hands tied.”

Currently, the $3.1 million deficit won’t be fully concrete until fiscal year 2027 is officially adopted, with Ebner trying to find places in the city budget to save funds before the city holds a budget resolution Aug. 4. 

“The tool has now been eliminated,” Gabriel said of city coffers before the 8% cap. “We’re going to work hard to try and fix that.”

Expenditures are rising from about $58.71 million in 2026 to nearly $61.77 million in the 2027 preliminary budget. And the biggest contributors to the more than $3 million increase?

There’s a 37% bump in building maintenance expenditures, from $928,993 in 2026 to about $1.27 million in 2027, for a total increase of $342,358. City fire department expenditures are rising from about $15.04 million in 2026 to about $15.92 million in 2027, for a total increase of $878,320. Meanwhile, streets/engineering department expenditures are expected to rise from about $7.02 million in 2026 to about $7.6 million in 2027, for a total increase of $596,480.

According to data presented by Ebner, for every $1 of taxpayer money spent, 62 cents go to public safety, 19 cents to general government, 12 cents to public works, and 7 cents to culture and recreation.

“With how much of our budget goes to public safety,” Sheckler said, “I don’t think we can defund public safety and make those cuts.” 

City revenue increased from about $56.8 million to about $58.79 million for 2027’s preliminary budget, an increase of about $1.94 million.

“We’re not going broke, we’re not running out of money,” Gookin said. “The city is not falling off a financial cliff.”