Boise City Mayor Lauren McLean proposed a new lower property tax increase for next year’s budget to account for unexpected revenue.
In 2021, the state passed a law capping property tax revenue by 3%, plus growth. The mayor said that was the original suggested rate for the upcoming 2027 fiscal year budget. In May, the city proposed a 4% increase in property taxes for next year, including 1% forgone, but on Tuesday, McLean proposed to lower it to 2.7%.
“The state has constrained us in how we can grow in the ongoing pressures to keep our services up in this community as we grow, but because we have additional revenue coming from growth that was unexpected, we're able to offset the increase in property tax,” she said ahead of the City Council work session.
The mayor said this change is because of unexpected revenue, to the tune of $2.9 million.
“The value of our new construction is higher than we expected, so we have more revenue coming in,” the mayor said. “The state opted not to take an increased percentage for our retirement funds, so we saved some money there.”
The Urban Renewal district downtown is also providing more revenue to the city than projected.
Property taxes are the main source of revenue for cities. McLean said Boise also receives some income from sales and liquor taxes.
“And then there are some areas like public works and the airport that are their standalone funds. They have revenue to cover their costs,” McLean added, “but the general fund that provides public safety parks, some public works, the things that make a city tick are all dependent on property tax.”
The 2027 city budget will be adopted later this year.
