County budget could reach $109M

A 3% increase in property tax revenue isn't the only contributor to the $109 million Kootenai County budget. There's also an unexpected climb in nontaxable revenue. 

Recent deliberations for the 2021-22 fiscal year show Kootenai County commissioners are considering a preliminary budget of $108.9 million — up from $98.9 million last year. 

County commissioners intend to finalize the next fiscal year budget Wednesday at 1 p.m.

Finance Director Dena Darrow said the $10 million overall increase stems from a 9.8% uptick in general government line items. 

About 5.7% of that $10 million is paid for with non-property tax revenues like grant dollars, state sales taxes and liquor taxes, fines, and fees. 

Sales and liquor taxes collected from the state exceeded county projections in 2021. Darrow said the uptick is likely due to an influx of growth and commerce from neighboring states like Washington, Oregon, and Montana.

The surplus was used for department budget asks initially cut by the commissioners, she said, mainly positions needed for mandated justice and emergency services. 

About $200,000 of the surplus was placed into the county fund balance reserve for a "rainy day," Darrow noted. 

"Service demand spikes have driven additional personnel needs. Wages need to be brought in line with market levels so we can recruit and retain," Darrow said. "A wage study will be conducted in the fiscal year 2022 for the 2023 budget season." 

As with businesses, Darrow said the county sees operating costs rise dramatically, driven by inflation and gasoline prices which have a trickle-down effect on transportation and goods. Cost of materials and shortages are also driving up prices, she noted, referencing lumber and ammunition in particular.

Commissioners plan to take the 3% allotted increase in property taxes permitted in the Idaho statute, totaling about $1,551,938 — or 1.42% of the total budget, Darrow said. 

Per new caps instituted under House Bill 389, a piece of property tax legislation approved by Idaho lawmakers during the 2021 session, government entities are limited to taking 90% of new growth revenue. 

"There are unintended consequences to trying to lower taxes," Darrow said. "They're (lawmakers) are saying let new growth pay for itself, but they are not at all." 

HB 389 also instilled a preliminary levy rate calculated by the state rather than using previous year data, Darrow explained, which dropped significantly in the 2021-22 fiscal year as it has done for almost a decade. 

"We used to compare 100% of our new growth by the last year's levy rate, but now we have a preliminary fake levy calculated on a new template. That fake levy rate is 23% lower than last year," Darrow said. "So we are being cut off on the percent side and have to take 10% off the top."

HB 389 provisions also limited government entities, like the county, to increasing the budget by a maximum of 8% — including the 3% property tax allotment and new growth. As of Friday, Darrow said the county is planning to increase by about 4.1%. 

When calculated against the county levy rate and adjusted for property tax replacement, Darrow said new growth is projected at a net $543,631.

Darrow said that new property taxes are anticipated to be levied about $2.09 million, or approximately 1.9% of the total budget. She explained that the remainder of the budget is funded by existing property taxes and other revenue sources. 

"Our 3% is driving most of the increase, and the rest we have to find in other revenue sources," Darrow said. 

The county won't confirm all values until after adopting the budget is in August. Still, Darrow said current estimates show that owners will see a $20.41 reduction in property taxes annually per $100,000 of property value. 

"For the last eight to 10 years, people have seen a drop in their property taxes from the county because we are just growing so much," Darrow said. "When I started at the county, we were reporting $17 billion or $18 billion in property value. Now we are at about $26 billion, and I've only been here five and a half years." 

Solid waste operations make up roughly $16 million of the total budget, Darrow explained, an 11.9% increase from the previous year. 

"Solid waste is using more of the budget because they have a lot of costs, and during COVID-19, they got hammered," she said. "Their operation is growing as the area is growing. More people means more garbage."