City proposes 2 percent tax hike

Plan could be adopted Tuesday

COEUR d'ALENE - Ask and you shall receive.

The finance department is proposing a fiscal year 2013 budget with a 2 percent property tax increase - not 3 percent - just as the City Council requested last month as staff prepared the $73 million financial plan.

The 2 percent increase equals $337,946 for the city.

At a budget workshop in August, the first draft of the plan called for a 3 percent increase, equaling $506,905. But the City Council said it didn't want to ask for the full 3 percent, in part because of the recession, and asked the finance department to come back with a plan capped at the 2 percent mark.

The council did approve a $73.6 million high-water budget proposed at the meeting. The high-water mark is essentially the budget's first draft, and the amount is what the city can't exceed when it officially adopts the plan at 6 p.m. Tuesday in the Community Room of the public library.

The newer draft trims around $1 million from the high-water version.

Besides the property tax reduction, the draft took away the 3 percent cost of living increases for the city's 350 full-time equivalent positions.

Negotiations are still ongoing with the three bargaining agencies, City Finance Director Troy Tymesen said, but two of the three have verbally agreed to take a 0 percent increase.

"The COLA is verbally worked out with Fire and (Lake City Employee Association), however it has not been inked," Tymesen said in an email. "Negotiations continue with the Police Association. So my answer would be 'it is still in process.'"

Merit pay increases are a part of the plan. Merit pay - which employees earn while reaching performance and time thresholds with the city - equal $230,167.

A 0 percent raise would save $647,459. The city also dropped around $50,000 between the building and recreation departments' service and supplies amounts.

Municipalities are allowed by state code to ask for up to a 3 percent increase in the property tax total amount from the year before. The requested total doesn't represent a straight 3 percent increase for property owners on their bills; rather the total affects levy rates, which, along with homeowners' exemptions, determine tax bills.

The 2 percent property tax increase would break down to $6.76 per $1,000 in net taxable value. With decreased valuations across the county, levy rates rise.

Using that formula, Tymesen said a 2 percent increase on a $200,000 home, using the homeowner's exemption, the property taxes would increase $94, or $7.83 a month.

The city has roughly $2.5 million in foregone taxes available.

Those are essentially untapped taxes the city could have collected but didn't - though still could.

In 2011, the city took 0 percent property tax increase. In 2010, it took 1.5 percent and in 2009 it took 0 percent, averaging a 0.87 percent bump over the last four years.

It's also the third time in the last four years the city's three bargaining agencies have opened up their contracts to negotiate their COLA amounts as a way to the help the city's budget.

Last year, employees got the full 3 percent, but the year before it was 1 percent, and the year before it was 0.

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