No go on 1% tax hike reduction

No dice for Coeur d’Alene property owners hoping to pay less in taxes.

On Tuesday, a proposal made by City Councilmember Christie Wood to slash 1% off a proposed 7% property tax hike for fiscal year 2027 failed.

“It’s painful on their side,” Wood said of taxpayers faced with rising costs. “It’s painful on our side.”

After the proposal failed, however, the council came to a consensus: The upcoming fiscal year will include a 7% property tax increase. This includes a 3% property tax increase, an annual bump legally allotted by the state of Idaho, as well as an additional 4% increase from what’s called forgone taxes.

Whenever Coeur d’Alene decides not to increase property taxes, the unused portion of the allowable increase is preserved as “foregone” taxing authority, Finance Director Katie Ebner explained. Right now, the city’s accumulated forgone balance is $6.49 million.

For months now, city officials have been trying to balance a $3.1 million deficit heading into the next fiscal year, which begins Oct. 1. To do so, the council agreed in August to hold certain job positions and capital requests, which helped slash the deficit to about $1.92 million.

“It just irritates me when people say we’re not living within our means,” Mayor Dan Gookin said, adding that city tax revenue is well below growing inflation rates. “I don’t like raising taxes, I don’t like having to pay more in taxes.”

According to Ebner, the city aims to generate $2.5 million more in property tax revenue, increasing from $27.31 million in FY 2026 to 2027’s requested amount of $29.81 million. 

City officials on Tuesday discussed how Idaho legislation is constraining local spending, with Councilmember Kiki Miller saying, “We have a really volatile situation coming from the state level.”

Discussions centered mostly on House Bill 389, which placed an 8% cap on budget and property tax revenue growth for local taxing districts. With a projected $244 million for FY 2027, the city is only allowed to generate $592,000 under this state-mandated formula.

Gookin also noted that property tax formulas heavily favor the property owner in Idaho, saying the more the city grows, the levy decreases.

“In a year where inflation has been a factor here, we are seeing so much less,” Gookin said.

The council also briefly discussed other funding sources that could’ve helped the city address the budget deficit. This includes closing the Lake District, a former taxing district within the city, as well as Idaho law that says resort towns cannot collect lodging tax revenue if a town exceeds a population of 10,000 inhabitants.

The current rate of $2.57 per $1,000 of taxable assessed value would bump to $2.70. The 7% property increase means property taxes for a person who owns a house valued at $500,000 increase from $1,285 yearly to $1,350. 

With Tuesday’s approval, the city heads into the new fiscal year with an expenditure budget of $154.83 million. Last year’s budget was approved for $151.9 million.

“You are getting tremendous value from the city of Coeur d’Alene,” Gookin said.