Rathdrum seeks changes to property tax law

The Rathdrum City Council adopted a resolution to support efforts to amend Idaho’s House Bill 389, which governs local property tax budgets. 

Council members said the law’s property tax restrictions have made it increasingly difficult for Rathdrum to keep up with the costs of growth and provide municipal services such as law enforcement, street maintenance and infrastructure. 

They believe new development should generate enough property tax revenue to help pay for the services it requires, rather than shifting those costs to taxpayers.

City Councilor Matthew Suhr said the resolution's passage gives City Administrator Leon Duce and staff "the teeth that they need" to convince legislators to amend HB389.

“He can say all day long that this is something that Rathdrum wants, but if it's not documented that it’s something we want, there’s no teeth to it," Suhr said.

Currently, cities can count 90% of eligible taxable market value from new construction and annexations. Rathdrum is looking to make that 100%. It also caps annual budget increases at 8%, which includes new development and annexation growth as well as the authorized 3% inflationary adjustment. The council would like to see the 8% budget cap amended or repealed.

In the last six years, Rathdrum has had $61.35 million discounted, translating to $335,649 lost compared to if Idaho cities were allowed 100% of eligible taxable market value. 

“This past year, I believe Rathdrum was one of three cities in the state of Idaho that actually hit the 8% tax cap on this,” Councilwoman Laura Fuller said. “This is specifically impacting cities that are growing really quickly.”

The U.S. Census Bureau reported that Rathdrum has grown by 44% since 2020 and everything from law enforcement, street maintenance, park maintenance and recreational staff need to keep up. Generating funds through new development would give the city money to keep services aligned with growth.

“I think it's simple math. When you take away 10% of someone's budget repeatedly, that's going to be a problem,” Suhr said.

Duce has already been working with state Reps. Jordan Redman and Vito Barbieri to try and amend the law.

A piece of legislation would have to go in front of the state House in January through March, have to be voted on in both bodies and then approved by the governor.

“The next major step is to go through the legislative process in the 2027 legislative session,” Duce said.

    Councilwoman Laura Fuller at the Rathdrum City Council meeting Oct. 28.
  

    Rathdrum City Administrator Leon Duce answers questions from the council about Idaho House Bill 389.