Rathdrum City Council adopted a resolution supporting changes to Idaho House Bill 389, which governs local property tax budgets. The measure would increase the taxable market value counted from new construction and annexations from 90% to 100% and revise or remove the 8% annual budget cap.
Rathdrum Property Tax Changes
Council members said current property tax restrictions have made it more difficult for Rathdrum to pay for growth-related costs and municipal services, including law enforcement, street maintenance, infrastructure, park maintenance and recreational staff.
Rathdrum has reported 44% growth since 2020. City officials said the current formula discounted $61.35 million over the past six years. Counting 100% of eligible taxable market value instead of 90% was estimated to reduce Rathdrum’s loss by $335,649.
Idaho House Bill 389 Proposal
The existing budget cap includes a 3% inflationary adjustment. Rathdrum is seeking changes that would allow new development to produce sufficient property tax revenue for the services it requires.
Matthew Suhr said the resolution provides Leon Duce and city staff with documented support while they seek changes to HB 389. Rathdrum has also worked with state Reps. Jordan Redman and Vito Barbieri on proposed amendments.
“This is specifically impacting cities that are growing really quickly,” Laura Fuller said.
Next Step for Rathdrum
Any proposed legislation would require approval by the Idaho House, both legislative bodies and the governor. Duce identified the 2027 legislative session as the next major step, with legislation expected to go before the state House from January through March.