Two Initiatives Aimed at Local Property Taxes Head to City Council

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(From left) Councilman Clayton Perry (D10) and Councilman John Courage (D9).

Bonnie Arbittier / Rivard Report

(From left) Councilman Clayton Perry (D10) and Councilman John Courage (D9) co-authored a request for City staff to study the costs and benefits of a City property tax homestead exemption and options for implementation.

Two separate fact-finding initiatives spearheaded by San Antonio City Council members will explore the data behind property tax valuations and a possible local homestead exemption.

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), but residents are feeling the burden of higher tax bills because of increasing property valuations and rates from other taxing entities. Residential property values across Bexar County increased by an average of 8.8 percent in 2017 – some as high as 40 percent.

Last week, Councilmen John Courage (D9) and Clayton Perry (D10) co-authored a request for City staff to study the costs and benefits of a City property tax homestead exemption and options for implementation. Councilman Manny Pelaez (D8) requested an analysis of the Bexar County Appraisal District’s valuation methodology last year and a vote to fund the analysis is slated for April.

“We’re the only mayor city in Texas that doesn’t have a [local] homestead exemption,” Courage said Wednesday.

Such an exemption, which is available on the state level, gives taxpayers a discount on property taxes for homeowners who have a primary residence in Bexar County. Courage and Perry will publicly launch their call for studying the feasibility of a local homestead exemption at a press conference Thursday morning.

“We want to find out what would be the cost [and] what is the best way to go about doing that,” Courage said. “If we can, we should provide [property tax] relief.”

Council members Rebecca Viagran (D3), Pelaez (D8), and Art Hall (D2) signed onto Courage and Perry’s request, which means the Council’s Governance Committee will likely take up the issue during its March or April meeting. If the committee agrees, City Council would vote to direct staff to perform the cost-benefit analysis.

Courage and most of his colleagues were against – or at least had doubts about – a homestead exemption when it was suggested by Perry and Councilman Greg Brockhouse (D6) during budget discussions in 2017 and 2018.

 

Tax bills typically increase because of climbing property values or school district rate increases.

Courtesy / City of San Antonio

Tax bills in San Antonio typically increase because of climbing property values or school district rate increases.

At those times, Council members largely agreed that the costs and potential cuts to City services associated with a 5 percent exemption – an estimated $6 million – were not worth it because taxpayers would only save about $27 annually for each $100,000 of a home’s valuation per year.

What’s changed?

“There didn’t seem to be enough support to move it forward,” Courage told the Rivard Report. “Since then, there’s been more interest in the community to take more action to provide [relief].”

Before making a decision about whether a homestead exemption is right for San Antonio, Courage said, he wants to make sure it makes sense. The City could start with a lower exemption, such as 2 percent to 5 percent, and increase it over time. The maximum allowed by state law is 20 percent.

“[The City wants to] make sure we don’t have to cut the important services that we provide,” Courage said.

“A [request for study] doesn’t mean I’m married to the idea,” Pelaez said.

But giving taxpayers relief is worth it, Perry said, because “every dollar counts” for many families with a fixed or low income.

“To me, the cost or the return of investment of something like this is in the eye of the beholder,” he said. “It could be as little as $20 to $30 a year … but, hey, $20 to $30 a year would help pay for some of these [utility and fee] increases.”

If the City wants to implement a new homestead rule in 2020, Council would have to approve it before the State’s July 1 deadline.

The City currently offers tax exemptions for people with disabilities as well as exemptions and tax freezes for senior citizens.

Courage also praised Pelaez’s effort to analyze the appraisal office’s operations. “These two ideas go hand in hand,” Courage said.

Meanwhile, the Texas Legislature is poised to consider a tax revenue growth cap that would require voters to approve tax rates levied by cities, counties, and school districts that would collect more than 2.5 percent in additional revenue compared to the previous year.

Mayor Ron Nirenberg and others have said a homestead exemption would not benefit taxpayers as much as more “meaningful tax relief” that should come from the State properly funding education.

“While San Antonio homeowners have the second-lowest property tax rate of any big city in the state, we need to do more,” Nirenberg said in an email. “And we especially need to insist that the Legislature stop shifting more and more of the burden for public school funding onto the shoulders of local districts and homeowners.

“I support an analysis of whether a homestead exemption is viable for the city and provides meaningful relief for homeowners.”

Brockhouse, who is running to unseat Nirenberg in the May election, said whatever the City can give back is “meaningful” to the taxpayer.

“It adds up, and you have to start somewhere,” Brockhouse said. He plans to attend the press conference on Thursday to show his support.

“I’m not trying to take any credit away from John [Courage],” he said. “It takes courage to come out and stand up on that and put that in writing. … But this isn’t blazing new ground.”

The idea that the City will have to cut critical services because of a homestead exemption, he said, is a “stupid scare tactic. … You don’t have to cut services if you spend the money in the right places. … We can take a knife to to the budget and trim the fat.”

Some newfound support for easing residents’ tax burdens might be related to the upcoming election, he said.

“Sometimes [getting re-elected] means listening to the will of the voters, and this is definitely a ‘will of the voters’ item,” he added.  “All residents want property tax relief.”

Pelaez, too, has made property tax relief one of his priorities since he was elected in 2017.

“More than ever before have I seen this much panic and anxiety over property taxes and rising values,” he said. “Granted, some of it is growing pains [of San Antonio] but at the same time, if my constituent says this is unacceptable, well, they’re the customer.”

It’s possible that once the study is completed, constituents may not want to sacrifice any City services for a homestead tax exemption, he said.

Pelaez said the renewed support for studying the matter is less about the election and more about making sure the City is prepared if the state unleashes new rules governing taxation.

“Councilman Brockhouse makes a hobby out of ascribing suspicious motives to his colleagues and he thinks he has a monopoly on doing the right thing,” he said. “I’m on the record as working on tax reform since the first day of my term.”

11 thoughts on “Two Initiatives Aimed at Local Property Taxes Head to City Council

  1. It shouldn’t be an all-or-nothing proposition – It’s totally possible to craft a homestead exemption that phases out with home valuation, if your goal is to provide relief to lower-income homeowners. I’m not an economist, but it seems that may have the added effect of decreasing demand for high-cost homes. But maybe it will also discourage community investment, so as not to make home prices rise? Hmmm… I don’t know. Someone help me out here.

    • I tend to agree that blanketing a homestead exemption that benefits higher-wealth homeowners seems an odd move in a climate where we’re finally beginning to see how wealth inequality has hurt our lower-income neighbors for many decades. In my view, the most helpful exemption is one that is tied to income. Besides that, though, the folks who are most struggling in our city are renters who have nothing to gain by such an initiative and are most vulnerable to rent increases and no-cause evictions.

      The biggest impact to the property taxes that homeowners pay is not actually in the city’s power, but at the state level, and the legislature has not shown itself able to push forward any meaningful reform there in a LONG TIME.

      • I would respectfully disagree with your thoughts about renters being the ones most struggling. These are folks who tend to have more than one child in the education system, yet pay no money into the school system. Regardless of the arguments consistently made about renters paying school taxes via their landlords, if the landlords stopped paying school taxes…well, those arguments are mute, aren’t they?

  2. Dump the property tax. Increase the sales tax to 18% and give the city 10.75. No one should have to lose their home because they can’t pay their property taxes. This sales tax, as it currently is, would still be based on consumption.

  3. I would presume that the reason most older people among us can’t afford their property taxes is because the value of their homes has risen so quickly…mainly because of the positive direction our city has taken. Why should the city do without recompense?

    Regarding tax exemptions for senior citizens, one idea might be this… Set up some type of an “escrow accounting” for senior citizens that would keep track of what they would ordinarily owe without the exemption. They get the benefit of the exemption during their lifetime. But when the property is eventually sold…by them, or by their heirs…the sellers of the property owe the amount “held in escrow.” That way, the senior citizens get the benefit of the tax exemption, but the city doesn’t do without their share.

    It seems to me that’s a win/win for all concerned.

    • That sounds a lot like “the sins of the father”, which has a loser. Some lower income families have to sell an inherited home precisely because they don’t want to be burden by the accruing property taxes. And they could have enough trouble selling off the house of a deceased parent without having to worry about increasing that asking price to cover the tax. We should call that a “survivor’s tax” because you have the unfortunate burden of being taxed for outliving the deceased.

      And I don’t have children and unfortunately never will so I won’t have anyone to inherit my home. So I plan on doing a reverse mortgage on my home so I can take the equity for myself. I don’t think banks will be backing your idea because they’ll pay the taxes in your idea for all their reverse mortgage homes.

      • I don’t feel too sorry when lower-income families “have to” sell a home because “they don’t want to be burdened” by accruing property taxes. Since the city hasn’t raised its property tax rate in over 25 years, if their city taxes are going up, it’s because the value of their home is rising. Why should others be forced to pick up the burden for people who are profiting from their homes?

        As for being taxed for outliving the deceased, I presume you’re against inheritance taxes as well?

        And I’d hope you’d reconsider a reverse mortgage. Those mortgages don’t allow for any tax breaks for the property owner and only benefit the banks. You’d be better off borrowing against your paid-off house and putting the money in an S&P 500 fund and drawing an income from the balance.

        People that take reverse mortgages…there’s a reason most have lower-incomes.

      • I don’t feel too sorry whenlower-income families “have to” sell a home because “they don’t want to be burdened” by accruing property taxes. Since the city hasn’t raised its property tax rate in over 25 years, if their city taxes are going up, it’s because the value of the home is rising. As for being taxed for outliving the deceased, I presume you’re against inheritance taxes as well?

  4. I would favor increasing sales taxes or even income tax. Property/housing/shelter is a basic necessity required to live (like food). People should not be taxed on a basic necessity. I can see adding a mechanism though to tax property if it crosses the line between necessity and luxury. For example if my family of five decided to purchase a 4,000 square foot home worth $1,000,000 anything over the “basic necessity” should be taxed. Of course determining where the line is between basic necessity and luxury could be controversial but I think that is a worthy cause for our lawmakers and communities to be discussing.

  5. I bought my home in July 2016. My property taxes have increased $500 per month in less than three years. This is with a Homestead Exemption on file! Can this really be legal?

    At the same time, despite writing to my councilman regularly for three years, my street has no sidewalk, curb, and is full of potholes. Let me keep my money and I’ll install the sidewalk myself.

    Legit question: do those who in apartments pay into the system for city services? It seems like the city is disincentivizing home ownership. They’re certainly disincentivizing fixing up your house. Why do home improvements? The city will only tax you for it.

    There has got to be a better way. My whole neighborhood is being taxed out of their homes, and I don’t know how much longer I can last.

    • If folks are being “taxed out of their homes,” its most likely due to higher and higher school taxes. When you drive past the multi-million dollar football stadiums, it’s easy to see why.

      And then you have school districts like South San ISD, the voters of which continue to elect people like Connie Prado. Ms. Prado has once again found herself in power and is demanding the re-opening of schools that we’re closed specifically because of a lack of students. How much do you anticipate that costing the taxpayer?

      All of the hub-bub about what Sheryl Sculley was costing the city…and the Connie Prado’s of the area are spending us right down the tubes!

      So, the people in that area that can no longer afford their property taxes…nope. I couldn’t care less about that, not one bit!

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