Bill could pinch tax entities, help taxpayers

Reducing Kootenai County's 2020 budget by $2 million for 2021 was a move by the county to save taxpayers money after a year unlike any other.

Even so, potential legislation could cut capital improvements and possibly county services.

The county's general fund balance acts as a safety net for employee payroll and capital expenditures, county auditor Dena Darrow said. Accumulated through unanticipated revenue, the Kootenai County general fund grows from several sources: untaxed resources, ending the year under budget, federally approved investment opportunities, and state revenue like property taxes.

Divided in two, the general fund has assigned and unassigned components. Kootenai County's unassigned balance acts as a reserve for two months of personnel and operating expenses. The assigned portion aids the county in capital purchases, oversized maintenance costs, and large one-time purchases — like the KEC facility and jail expansion — to preserve taxpayer dollars and keep taxes relatively low.

The county's general fund balance is about $21.6 million.

There are two potential issues on the horizon that could impact the general fund, Darrow said. One is a structural change in the state property taxing structure and the other is Kootenai County's 2021 budget.

Legislation from a joint committee co-chaired by Coeur d'Alene Rep. Jim Addis includes proposed cuts to local government reserve funding. Initially suggested by Sen. Jim Guthrie, R-McCammon, the code would also limit an entity through budget constrictions.

"We have the buildup of taxing pressure over the last 20 years," Addis said. "This legislation hopes to stop that, and modify the system to make it sensible for the taxpayer and workable for local taxing districts to change how they do things."

Addis said excess funding is the issue, as he knows of some entities holding over $50 million in their capital reserve funds. That's money he believes should be back in taxpayer pockets.

"What happens is the local taxing districts hold more funding than they need to operate, and that is excess fund balance money they have taxed someone and not using," he said. "On top of what's prudent and normal should be returned to the taxpayer for some relief, whether that means going to offsetting budgets or to reducing future taxes."

Language in the legislation would change general fund balances by limiting taxing authorities like the county to reserve three months of expenses and one month as a rainy-day fund. The rest would have to be spent, Darrow said.

"This means we can't set aside funds to pay cash for long-term projects and will be forced to go into debt instead," Darrow said. "This squeezes us in both directions."

Dropping its overall budget from $101.6 million last year to $98.9 million this year, the county expects $2 million less in expected expenditures and revenue.

"I don't anticipate us having leftovers in 2021," Darrow said. "It really cuts into what we can do."

Addis said the legislation's intentions — including one that would require transparent reporting of district revenue and expenses — are to shine a light on effective taxing practices.

"The government is there to provide necessary services, but we should not have the government keeping as much taxpayers' money as possible," Addis said. "I'm hopeful that taxpayers could have less of a property tax burden, and I hope we make it to where we can provide the services the taxpayers truly need through a compromise."