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.