Council Mulls Property Tax Exemptions Ahead of 2020 Budget Discussions

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City Council members in B session on June 12, 2019.

Stephanie Marquez / Rivard Report

City Council members discuss the 2020 budget.

Most San Antonio City Council members on Wednesday seemed open to providing some form of residential property tax exemption, but were wary of how that could strain already tight budgets for other services the City provides.

The City’s budget was stretched even tighter during the recent State legislative session due to revenue restrictions placed on the City, and it’s still unclear how education and property tax reform at the state level will impact local school districts – and ultimately homeowner tax bills. Another bill decreased fees collected from telecommunication companies, which reduced the City’s budget by $7 million.

City Council weighed the pros and cons of providing enhanced property tax exemptions and freezes for over-65 and disabled citizens, a citywide homestead exemption, various property tax exemptions, and adopting new financial policies for the next year during a budget discussion on Wednesday. Typically, these conversations start after winners of the municipal elections take office, but this week they’re getting a sneak peek ahead of the traditional budget goal setting session on June 21.

City Manager Erik Walsh said he wanted to give Council – especially newly-elected members – more time to consider budget issues and ask questions before that day-long meeting.

Jada Andrews Sullivan, Melissa Cabello Havrda, and Adriana Rocha Garcia will replace outgoing councilmen Art Hall (D2), Rey Saldaña (D4), and Greg Brockhouse (D6) next week. The three new Council members attended the presentation on Wednesday and are expected at another round of presentations Thursday afternoon.

Mayor Ron Nirenberg and Council members Ana Sandoval (D7), Shirley Gonzales (D5), Rebecca Viagran (D3), Manny Pelaez (D8), Saldaña, and Hall said they have heard the concerns of residents regarding property tax relief – but that there are other concerns residents have that require City funding to resolve.

“I feel a lot of uncertainty in our budget,” Gonzales said, given the new constraints handed down by the state. “I think we should just hold [on to] what we’ve got.”

Councilman Clayton Perry (D10) advocated for at least a “small start” for a larger homestead exemption. He suggested that the City could dip into its reserves and use contingency funding usually used during mid-year budget adjustments to provide property tax relief.

The City is in better financial shape than it was a decade ago because it maintains reserve and contingency funding, said Councilman Art Hall. Until December of 2018, the City held the highest, AAA, bond rating from all three major agencies for nine years. Fitch downgraded the City because of the voter-approved provision that gives firefighters an advantage in contract negotiations.

The better the bond rating, the lower the interest rates the City has to pay on debt.

For instance, said the City’s Chief Financial Officer Ben Gorzell, if all three agencies downgraded the City by two levels the gross cost to the City would be anywhere from $45 million to $75 million.

This graph shows the potential financial impact if all three bond rating agencies downgraded the City of San Antonio.

Courtesy / City of San Antonio

This graph shows the potential financial impact if all three bond rating agencies downgraded the City of San Antonio.

Perry questioned why Gorzell would show a slide depicting the possible impact.

“I’m not sure why we keep showing this,” Perry said. “[They are] putting clouds in the sky over our budgeting process.”

Those bond rating agencies will be closely watching what cities and other entities do across the state to manage the new state rules, Gorzell said.

The City should keep tabs on its financials with these agencies, Pelaez said, just like he keeps tabs on his cholesterol. One wouldn’t say you “just need to stop checking those things because it’s a downer,” he quipped.

Brockhouse, who lost a close mayoral runoff over the weekend, did not volunteer to speak during the meeting. In the past, he has agreed with Perry that any decrease in property tax would be meaningful, no matter the size. The average homeowner would save less than $50 per year under a 5 percent homestead exemption; $100 under a 10 percent exemption.

Most Council members were more favorable towards strengthening existing exemptions for senior citizens and the disabled.

The City of San Antonio has not raised its property tax rate in 25 years and has lowered it four times in the past decade.

If City Council wants to implement a homestead exemption, the state deadline to do so is July 1, so it’s possible that Council will vote on the matter on June 21. City Council takes the month of July off from regular Council and committee meetings.

New Council members will be inaugurated next week during ceremonies on Wednesday, June 19.

10 thoughts on “Council Mulls Property Tax Exemptions Ahead of 2020 Budget Discussions

    • Exemptions benefit lots of wealthy who don’t need a tax freeze. And landlords pass the taxes along to tenants, so these exemptions ultimately hurt renters, aka the less wealthy. Just cut rates across the board.

  1. Manny Pelaez had better work towards these exemptions. That was a hot issue in the race, and a lot of his constituents were angry about his blase approach to it.

  2. City hasn’t raised taxes in 25 years? They don’t have to…the out of control BCAD does it for them by increasing home/land values without a matrix. CC may very well pass tax exemption but it won’t matter to homeowners bc their values will just go up. Stop giving tax ABATEMENTS to developers and disclose the values and tax rates of commercial properties.

    • EXACTLY!!! Unless someone reins in the out of control and totally insane INCREASES IN APPRAISAL for residential property, they will tax most homeowners out of their homes. Furthermore, Greg Abbott has just signed state legislation that will cap both rate AND appraisal Statewide. Many counties, however, have increased appraisals nearly 300% this year in anticipation of that cap. Those outrageous increases must be challenged by home owners in.

  3. This line of how the City has not raised taxes in 25 years is bogus! The tax does not need to increase because of the run away appraisals! Poor people cannot afford the higher taxes and are being forced out of their homes by the newcomers that will pay any price. Reform the appraisal process!

  4. The appraisal is not the problem. By definition it’s just an expert opinion on the value of a piece of real estate. BCAD is generally accurate. The people squawking about their appraisal going up would be highly unlikely to list their house for sale for less than that appraised value.
    People are indeed being driven out of their homes by taxes but that’s because the houses are worth more, often because gentrification has made the neighborhood more attractive which means buyers will pay more to live there. The only way the City can prevent long-term residents from being displaced is to freeze the taxes on long-term owner-occupied homes, perhaps after 10 years of occupancy. The appraisal will continue to rise to match neighborhood values, as it should. Increasing home value should instill pride, not fear.
    BCAD should truthfully state the market value of properties. That’s their job. It’s the City’s job to protect citizens from the unintended consequences.

    • Freezing taxes on long term occupied homes just shifts the burden to first time homebuyers and new home owners – does a young family deserve the tax burden?? Do future homeowners deserve to pick up the tax burden?? I’m not sure that is fair either.

  5. I completely disagree that BCAD is a fair appraisal by experts. When confronted w facts in challenging an appraisal they can give you no facts in return that match their appraisal. Further they seem to rotate in ‘equal’ value areas where the big increases are in any given year. BCAD is out of control and needs to have a clear matrix on how values are assessed.

    As for selling s home using BCAD numbers -BCAD does land and house-not other factors that make people choose a particular home.

  6. Perhaps the City of San Antonio should stop wasting money taking the firefighters union to court on meritless litigation? Perhaps the City of San Antonio should stop subsidizing high rent apartment projects at the expense of low and moderate income people?
    Perhaps an increase of property taxes on corporate properties? Their is plenty of money untapped, but it takes courage and principles to collect it!

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