Coeur d'Alene put about $244 million of new construction on its books heading into fiscal 2027. The year before, the figure was about $80 million. Under Idaho's budget formula, that tripling is worth only about $592,000 in new city property tax revenue, according to the Coeur d'Alene Press. That isn't enough to cover the city's costs, so the council voted on Sept. 1 to adopt a 7% property tax increase, built from the state's 3% annual allowance plus 4% in forgone taxes. The Press reported that the city levy rate will move from $2.57 to $2.70 per $1,000 of taxable assessed value.
Most buyers coming from other Western markets assume that a growing city spreads its costs across more rooftops. In Coeur d'Alene, state law limits how much those new rooftops can carry. Anyone buying here this fall should understand that before the first bill arrives.
How the levy formula works
In Idaho, a city decides how many dollars it needs from property tax. The levy rate is that dollar amount divided by the total taxable value in the city. According to the Sept. 1 council minutes, Mayor Dan Gookin described property value as "the denominator," noting that "as the city grows the less the city gets." When values rise faster than the budget, the rate falls. That is how a growing city has usually held its rate down.
The budget is the part the state limits. House Bill 389, which Gov. Brad Little signed on May 12, 2021, set the rules Idaho cities still use. Under the bill text:
- A taxing district can grow its property tax budget by 3% a year, measured against its highest budget in the prior three years.
- Value from new construction and annexations adds more budget room, but it counts at only 90%, and that room is calculated using a preliminary levy rate.
- The combined increase is capped at 8%, except where an urban renewal district is closing.
The 90% figure is a rule for calculating budgets. It is not a discount on anyone's assessment. It limits how much new growth can add to a city's budget, and that is how $244 million of construction came to support only about $600,000 of added revenue. City staff reported that figure at the September meeting. In the same meeting, Finance Director Katie Ebner said that while growth helps close the deficit, the city has to provide services to that growth.
Where the rest of the 7% came from
When an Idaho city takes less than its allowed increase in a given year, the unused amount carries forward as "forgone" taxing authority. HB 389 lets a city recover up to 1% a year of that balance for operations. It can also use up to 3% of that year's budget for capital projects, and that amount is deducted from the forgone balance. Ebner told the council the city had not taken its 3% annual increase in earlier years, because the formula had usually produced more than 3% in new revenue anyway. That forgone balance had grown to $6.49 million, according to the Press.
| FY2027 piece | Amount | Source of authority |
|---|---|---|
| Annual increase | 3% | Standard Idaho allowance |
| Forgone, operations | $307,761, or 1% | Ongoing, recovered from forgone balance |
| Forgone, capital | $923,282, or 3% | One-time, must fund items expected to last more than seven years |
| Total city property tax revenue, as reported | $27.31 million to $29.81 million | FY2026 to FY2027, including growth |
Ebner told the council that the capital portion would have to be tied to qualifying items and reported to the State Tax Commission. She gave a dump truck and a crashed police car as examples of the kind of expense it could cover. At the meeting, Councilmember Dan Sheckler pointed to roads that need chip sealing and playground equipment at McEuen Park.
The council considered smaller increases first. A motion to hold the total at 6% failed, and so did a motion to cut the capital portion to 2%, or $615,522. The final resolution passed with the full 4% in forgone taxes. The city had started budget season about $3.1 million short. Holding some positions open and deferring capital requests brought that gap to about $1.92 million before the vote.
Post Falls did the same thing two weeks earlier
The Coeur d'Alene Press reported that Post Falls approved its budget on Aug. 18 with a 4% property tax increase plus a one-year 3% use of forgone authority to expand its police department. A Post Falls official said growth had been a major revenue source before HB 389, and that the law cut new-construction value to 90% in the formula. The city also said its ongoing new property tax revenue had grown only 7% in total since 2009, while inflation had risen about 47% since 2017.
During the Coeur d'Alene budget hearing, Gookin asked whether the city's approach matched what Post Falls had adopted. Ebner confirmed that it did and said every city would need to take as much as it could because of how the formula had changed. Kootenai County took its 3% as well. Commissioners voted 2-1 for an FY2027 budget that includes a 3% property tax increase and about $67.7 million in property tax revenue, the Press reported.
So comparing Coeur d'Alene with Post Falls on tax trends alone won't tell a buyer much this year. Both cities face the same formula, and both responded to it the same way.
What the new rate means for one house
The Press put the city's share of the bill in dollar terms. For a house valued at $500,000, the city portion rises from $1,285 a year to $1,350. That is only one line on the bill. County, school and other district levies are added on top, and each owner's total also depends on how their own assessment moved.
The pressure may ease somewhat in coming years. Ebner said the River District urban renewal area is closing and would bring the city about $800,000 in added revenue. She also said long-unchanged building department fees could be updated, raising about $575,000. New construction reaches the assessor's roll only after a certificate of occupancy is issued. That includes homes in Coeur Terre, which council members asked about directly. Even then, those homes enter the formula at 90%. The mayor has said there will be a fall workshop on long-range budget planning.
What changed for buyers in 2026
Two newer state rules matter more to a buyer than the levy rate does, and both took effect this year. Boise State Public Radio reported that under a 2025 law, House Bill 354, primary-residence buyers can now apply for the homeowner's exemption at any time of year, and it is prorated. Before this change, anyone who bought after April 15 waited until the following year for the benefit. The Idaho State Tax Commission describes the exemption as removing 50% of a qualifying primary residence and up to one acre from taxation, capped at $125,000.
The same law also changed assessment appeals. If a property's assessed value rises more than 10% from the prior year and the owner appeals, the county carries the burden of proof.
If you're closing on a Coeur d'Alene home this season, three dates and documents matter:
- December 20. Kootenai County's tax FAQ says the first half of the 2026 bill is due on this date. The second half is due June 20, 2027.
- Your closing date. A purchase made after April 15 no longer means losing the exemption for the year. It is prorated, and you have to apply for it.
- Next spring's assessment notice. Compare it with the prior year's value. The 10% threshold decides who carries the burden of proof if you appeal.
This is general information, not tax or legal advice. Confirm how these rules apply to your property with the Kootenai County Assessor's office or a tax professional.
FAQ
Does the 90% rule mean my home is assessed below market value? No. HB 389's 90% figure applies to new construction and annexation value inside a taxing district's budget calculation. It isn't a discount on any individual assessment.
Is the 7% increase in Coeur d'Alene's tax revenue a 7% increase in my bill? Not directly. The 7% is the increase the council adopted under the state's allowances, and it applies to the city's budget, not to any one parcel. Your city share depends on the new rate of $2.70 per $1,000 and your taxable value. The rest of the bill comes from the county and other districts.
Can Coeur d'Alene keep drawing on forgone taxes? The balance was $6.49 million before the FY2027 vote. HB 389 limits operations recovery to 1% a year and capital recovery to 3% of that year's budget.
When a Coeur d'Alene property is on your shortlist, its carrying cost belongs in the comparison alongside the purchase price. If you'd like to see how a specific address's current tax history and the new city rate fit into your comparison before you write an offer, Darren Miller can pull that together and point you to the assessor or tax professional for the questions only they can answer. Let's Connect.
