Post Falls council open to tax hike

Failure to increase not wise long term, some officials say

POST FALLS - The debate over whether to increase property taxes in Post Falls will likely rage on this year.

During a budget workshop on Wednesday, the City Council gave staff the OK to start crafting the fiscal 2011 budget with a tax increase proposal of up to the allowable 3 percent if it's needed.

The council did not specify a certain amount of increase due to unsettled revenue projections from the state and a teetering economy.

"I feel comfortable with something less than 3 percent with the understanding that things are going to change," Councilman Ron Jacobson said.

The majority of the council was on board with a proposed 2 percent tax hike proposal last year until it agreed to no increase after some citizens said a recession is not the time to raise taxes.

But the council on Wednesday agreed with City Administrator Eric Keck that holding off on a tax hike isn't in the best interest of taxpayers long-term.

Councilman Scott Grant said he remembers the mid-1990s when the city had consecutive years of not increasing taxes.

"We paid for it, and we've been playing catch-up ever since," Grant said. "I don't want to saddle the person sitting in my seat five years from now."

Others agreed it's better to have consistent small increases in taxes and fees rather than the shock of larger hikes later.

"In these difficult times, no one wants to hear that an element of government is going to increase taxes," Keck said. "However, by deferring an increase into the foregone tax balance diminishes the power of those dollars. Today's dollar will not be worth the same at an indefinite point in time.

"Additionally, the city cannot afford to maintain its current level of service while at the same time continuing to decline an increase to the property tax."

But Post Falls resident Jerry Schultz, who attended the workshop with fellow citizen Fred Ebel, said the city needs to continue to tighten its belt just as residents have done.

"The city needs to find ways to get people to open their wallets and purchase goods and services," he said. "That helps everyone. Raising property taxes helps few."

Schultz called for a "gathering of the minds," including the public, city officials and businesses, to collaborate on economic issues and benefit the common good.

"It would take us from tax and spend to an economy that will benefit the masses," he said.

The council set the following budget priorities:

n maintain maintenance and personnel;

n maintain a reserve fund;

n keep wages competitive;

n maintain infrastructure such as streets and parks; and

n environment.

The council agreed to not use funds from its foregone tax balance of about $255,000 in the budget process, but will use taxes generated from new growth, about $150,000 last year.

The city has had a wage freeze since last year, but the council and staff voiced a willingness to soften this year with some positions, including on lower-paid jobs and with patrol sergeants who around $60,000 have fallen behind neighboring agencies.

"We need to look at the bottom part of our pay scale to get those adjusted fairly," said Councilman Skip Hissong, who vocally opposed a tax hike last year. "Believe it or not - even if that took a small increase in taxes - I'd support it."

Police Chief Scot Haug said it would cost the city more in the long run to retrain new employees if it lost existing staff, particularly supervisors, to neighboring agencies due to higher pay. Therefore, he said, it's important Post Falls stays at least in the middle of the pack with wages.

Most department heads agreed they could get by this year without having to hire additional staff.

The city estimates it will see about a 5 percent reduction in revenue from the state this year, making for another tough budget year.

The workshop was the start of the city's budget process, which will conclude with a public hearing in August.