There has been a lot of dialogue at City Council regarding property tax relief for San Antonio homeowners. Throughout my campaign and throughout my tenure on Council, I have spoken in favor of reducing the city tax rate or establishing a city homestead exemption.
During the budget approval process, we discussed that reducing San Antonio’s tax rate would harm the City’s ability to provide services and render minimal dividends to homeowners. I appreciated the dialogue that followed, and my fellow Council members made some valid points. While there were varying views on this topic, what we could all agree on is that our neighbors deserve meaningful relief.
A city’s core functions include maintaining streets, managing public safety services through police and fire departments, ensuring City codes are enforced, and providing parks and libraries for residents. In years past, the City has taken on more projects and expanded services beyond what is required in the City Charter. That’s not to say expanding services is a bad idea, or that we are mismanaging our taxpayer dollars. However, as a city expands its range of services, it sends a mixed message to the taxpayers footing the bill who do not experience the same level of growth with their own budgets.
Our General Fund grows every year due in part to higher home appraisals. We tout that we have not raised our tax rate in more than 25 years, but this is due to the windfall we receive in rising property values. Our residents do not see their budgets increase each year. They often have to pare their budgets down to accommodate higher tax bills. Some homeowners simply cannot afford to stay in their homes anymore due to the swell in appraisal values and accompanying taxes, so they sell.
It’s easy to pass the blame on the appraisal district or the State as they are tasked with the sole responsibility of assessing home values. However, this is not a good enough reason to shy away from implementing our own methods of relief.
State law indicates that the City has the option to institute a municipal residence homestead exemption of up to 20% of a property’s appraised value. Other cities in Texas have already implemented their own homestead tax exemptions. We should be moving forward with our own.
Unlike other cities, San Antonio owns its utility companies. This translates into revenue for the General Fund. In addition to our utility revenues, our General Fund is supported by property taxes, grants, and charges for services, debt proceeds, and sales taxes.
We know we will receive more in taxes this year based on rising home values. We also know we will most likely receive more in CPS Energy revenues – the more people live here, the more power is consumed. When estimating for the Fiscal Year 2019 budget, I believe we should use the same $2.7 billion budget as a baseline for next year instead of increasing it with the anticipated additional revenue, and also phase in a homestead tax exemption.
We don’t need to attempt a full-throttle homestead tax exemption of 20% right off the bat. That would undoubtedly cripple the City’s ability to continue serving the public. But what if we can set the foundation for a homestead tax exemption and then modify the rate as we go along? We already have the power to modify a property tax rate – This approach follows in the same suit and provides relief to homeowners.
By implementing a phased-in homestead exemption approach, we will still be left with a budget that satisfies the needs and wants of San Antonio residents. Over time, the homestead exemption rate can increase to a final exemption rate and our budget can remain robust and stable. With more than 1 million residents expected to move to San Antonio by 2040, our utility, sales tax, and property tax revenues will increase due to additional customers and, thus, help accommodate the loss in tax revenue from homesteaded residences.
The same way school districts and Bexar County administer exemptions, a citywide homestead tax exemption would directly benefit our residents who choose to live and invest here. It would not affect our commercial property tax revenue or exempt investment property owners. It’s a way to put money back into our residents’ wallets and give them additional spending power. We still receive property taxes to fund City services, but we avoid standing by idly while our residents shoulder the burden of higher taxes each year.
I don’t believe our homeowners should have to wait until the next legislative session to hear if they will receive tax relief. We have the chance to act now, and I believe we should.
Homestead exemptions based strictlly on a set percentage would put more money back into the pockets of (favor) wealthy people owning expensive homes. If the city wants to really help home owners hard pressed financially (those living in homes such as the one pictured and those facing gentrification issues), better plans could be offered. For instance have a graduated plan that treats everyone the same but stops providing extra relief when it reaches the average price of a home in the city; for any value above that amount, full tax rates would apply. For gentrification problems (limited only to neighborhoods with property values increasing each year a certain percentage above the average city property value increases), provide deferred tax payments above a certain value for any homesteads that have been claimed for more than a given number of years with the deferred taxes due at any point there is a transfer of title.
Yeah a lot of tax revenue from people who can afford it would be forgone, not to mention that anyone who owns a home with increasing taxes owns an asset that is increasing in value, and thus is building wealth. An owner can use that wealth to take out a home equity loan for repairs, to build an addition or an accessory dwelling to rent out and earn revenue, etc… Fundamentally, the extra tax they pay is a small portion of the extra wealth they are building in property and home value. Also, it shifts relative tax burden on rental properties, in the long term resulting in less affordable rentals. Renters don’t build any wealth as the property they live in appreciates. So renters, the ones who actually get burdened, stressed or displaced without anything to show for it, aren’t helped by this proposal, and in the long run would be negatively affected .
I see this tax abatement suggestion as only part of a just and equitable solution for providing property tax relief. Taxes on property by the public school system represents a very large portion of a taxpayer’s tax bill. Property owners are strapped with tax “from the cradle to the grave” so to speak with this particular tax unfairly. Helping families more easily meet their tax burden while rendering a fair method of taxation to provide education is to tax only those families with school age children. As the children reach a certain age, no longer attend school or move away, this tax for education should be relieved. It’s a “pay for what you use” scenario. It’s only fair that those who are using the system, i.e., have kids in school, pay for schooling rather than having all property owners, particularly empty nesters or those that elected not to have children continue to pay for the education of others’ children.
But I think the point of fairly taxing through a school district is that, even though I am not directly using it, I still benefit from well-maintained school infrastructure (including kick-ass libraries), robust teacher and administrators’ salaries, nutritious food and well-stocked school food pantries (for our less fortunate kids), meaningful and fun after-school program…
…these kinds of learning and training opportunities and environments I want my neighborhood kids to have, so that they get a great start as future residents, who can be fairly taxed through their school district so that they benefit from …. )[namaste](
I agree. Have you seen the HUGE expensive schools being built? the traffic clogs residential streets. Education must move online in the near future!
With that logic, should one be exempt from paying for street improvements if they don’t own a car???
Paying school taxes to support public education benefits society as a whole. Everyone has a vested interest in educating the next generation because these kiddos will end up being our doctors, lawyers, and plumbers as we age.
Thank you Councilman Perry, it is an issue worth discussing among the people and our city reps.
I’m a little hesitant on this, as our SAFD still does not have a contract, and under the current projection we’re slated to go above 2/3 of the city budget soon.
I like that Dansktex is thinking more of the gentrified and gentrifying areas. I would like to add that even if a homestead doesn’t meet a percent amount above an average value in a sector (whether city, ZIP code, school district), the homestead exemption kicks in after the property value reaches a certain amount (I wouldn’t want to miss out, if the percent amount my property moves up is only 4.99 % per year, for 6 years, and the sector threshold is 5.00% per year. I don’t know if there is such a concept as “creeping gentrification”….)
Transfer of title deferred payment (“balloon taxation payment”): Would there be an exemption for estate transfers to direct family members? ‘Cause that seems contrary to the whole point of wealth-building across generations of family (…maybe there could be a “clawback clause”, if the inheriting family does not keep the homestead and live in it, no rentals or AirBnB-type stuff, for, idk, 10 years?…)
Thanks for the mind-juice, Dansktex and Councilman Perry! Looking forward to my Councilwoman Sandoval seconding your motion )[namaste](
It really bothers me when others seem to know what someone else can “afford”.
I believe taxes are too high and that government doesn’t need to reach into my wallet all the time to do things that they aren’t chartered to do. Government is always looking for new revenue streams and use every means necessary to tap our hard earned money. I feel it is out of control. I will vote yes for any property tax control legislation.
Increase the sales and gasoline tax to compensate for any loss in revenue and lower property tax.
AGREE