Rathdrum changing street lights from fee to tax

RATHDRUM — Rathdrum is the latest city to make the switch from charging for street lights as a monthly fee on residents' utility bills to a tax.

The change means some residents will pay more for street lights and some less, depending on home values.

All residents now pay a flat $2.35 fee per month for street lights.

As a tax that will be effective Oct. 1, the owner of a $200,000 home will pay $6.28 less per year. The owner of a $250,000 home will pay $4.68 more per year, and the owner of a $300,000 home $15.64 more.

"The net amount of increase will be less than four grande caffe mochas," Rathdrum City Administrator Leon Duce said, referring to the increase for the owner of a $300,000 home.

Since the fee is being eliminated, the city council, under the city budget approved Wednesday night, took $85,000 from its foregone tax balance to help make the switch. Foregone is a taxing authority built up from previous years of the council not taking the maximum yearly property tax increase of 3 percent.

City officials said the change from a fee to a tax for street lights was due to court cases that determined fees are based on usage and taxes are used to pay for services that equally benefit all residents. Some cities also fear a lawsuit will be filed if the change isn't made, coupled with the cost of defending a suit they don't believe they will win.

"It's not worth going to court to spend a half a million dollars," Mayor Vic Holmes said. "It makes more financial sense to take it out of General Fund (as a tax) and avoid that controversy."

Post Falls also made the street light switch while approving its budget. Coeur d'Alene plans to continue charging for street lights as a fee, while Hayden has been funding them through taxes.

Rathdrum's General Fund budget for fiscal year 2017 is $9.1 million compared to $8.5 million for the current year. The council did not increase property taxes for the coming year to balance the budget.

Employees will receive up to a 2.5 percent pay increase based on merit and evaluations and a 2 percent cost-of-living adjustment. The total cost for the pay hikes is $92,305. No new personnel were added to the budget.

Duce said the city was able to avoid a property tax hike with belt tightening that included pulling purchasing a street sweeper from the budget. He said the city will rent the equipment for what little it's needed during the year.

New growth has helped the city budget in recent years and also offset the need to raise taxes, Duce said. The city will receive $79,945 in new construction dollars for the budget from building permits in 2015.

No residents spoke about the budget at the public hearing.