Post Falls council hears extended budget debate after AIC projection error; council continues FY2026 decision and reserves foregone balance

The Post Falls City Council held a prolonged public hearing on the proposed fiscal year 2026 budget on Aug. 19, hearing staff presentations, public comment, and extended council debate before voting to continue the budget decision to the next regular meeting. The council also adopted a resolution directing staff not to use the city’s available foregone taxing authority in FY2026.

City staff and Mayor Jacobson addressed a high-profile issue raised in the community: a calculation error by the Association of Idaho Cities (AIC) that underreported anticipated state transportation-disbursement projections for FY2025 by roughly $900,000. The mayor thanked the citizen and a state senator who flagged the discrepancy; staff said AIC identified and corrected a calculation error but emphasized that full fiscal-year receipts for FY2025 will not be known until state disbursements finish at the end of the fiscal year.

Finance staff presented a constrained FY2026 framework: limited new-expenditure capacity, rising personnel and insurance costs, capped new-construction/annexation revenue under state law (House Bill 389), and a foregone balance of nearly $3 million that the city can access under narrow statutory limits (1% ongoing per year for operations and a one-time 3% for capital). The staff proposal included a budgeting assumption of new growth revenue plus a 3% general-budget increase; staff said an average homeowner could see a city tax bill decline from last year because the 1-time 3% capital levy taken in FY2025 drops off the bill for FY2026.

Public commenters and council members debated the appropriate conservative posture. Mayor Jacobson and several council members argued the council should plan conservatively and retain fund balances for known infrastructure and regulatory needs, citing master plans and deferred needs (water, wastewater, transportation, facility replacement) as reasons to avoid relying on uncertain state revenues. Others on the council and some commenters urged deeper expenditure reductions or delay to avoid repeating tax increases year after year.

Two formal votes followed the hearing. A motion to adopt the presented budget failed on roll call. The council then voted to continue the public hearing to the next regular meeting so members could review additional materials staff provided that day. Separately, the council voted to adopt a resolution directing staff to reserve — not expend — the city’s foregone balance for now.

What happened next: staff will publish updated materials and the council will reconvene the budget hearing at its next regular meeting. The resolution to reserve foregone authority means the council did not tap the city’s foregone taxation capacity for FY2026 in this action.

Key documents discussed: city FY2026 proposed budget packet; AIC revenue-disbursement projections and AIC’s subsequent correction; references to Idaho House Bill 389 (limiting new-growth tax treatment).