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.
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.