A campaign promise by one mayoral candidate to cut property taxes for San Antonio homeowners by lowering the City tax rate would make little difference in most taxpayers’ pocketbooks.
The lowering of property taxes dominates a list of pledges that Councilman Greg Brockhouse (D6) released Monday as actions he plans to take in his first 90 days in office if elected in the June 8 runoff against Mayor Ron Nirenberg.
In the last two budget cycles, Brockhouse and Councilman Clayton Perry (D10) voted for lower City property taxes that would represent minimal savings for homeowners while disproportionately affecting the budget for providing services.
“Property taxes are out of control and the current mayor has voted twice in the past two years against a property tax cut,” Brockhouse said in a news release.
Brockhouse and Perry were the only Council members to vote for the proposed tax cuts. When Nirenberg was representing District 8 on City Council in 2014, he voted to decrease the 2015 rate alongside a unanimous Council.
Property taxes are billed and collected by the Bexar County Tax Assessor-Collector’s Office and the City’s take is combined with those of the County, school districts, and other taxing entities through an interlocal agreement.
Like other taxing entities, the City sets the rate according to its needs for operating budgets and debt repayment and in accordance with Truth in Taxation laws. Rates are forwarded to the tax assessor-collector and applied to the property values established by the Bexar Appraisal District. The City does not appraise property.
The City’s current total tax rate is 55.827 cents per $100 of taxable value and accounts for about 22 percent of an average taxpayer’s overall property tax bill. By comparison, school district tax amounts make up about 54 percent of the annual bill. The City has reduced its tax rate seven times over the past two decades, and there have been no increases in 26 years.
Reducing the tax rate, however, is only one way the City can affect personal property taxes. It also could increase or implement exemptions, such as the homestead exemption Brockhouse has proposed.
A homestead exemption is essentially an exemption from property taxes that can be claimed by homeowners on their primary residence. For example, if a home is appraised at $100,000 and qualifies for a $15,000 exemption, taxes would be owed on the home as if it were worth only $85,000.
While the City does not currently offer a homestead exemption, it provides three other tax exemptions and a tax freeze for property owners.
One is for property owners 65 or older (up to $65,000 of taxable valuation). The others are for disabled veterans and individuals and range between $5,000 and $12,500, depending on the disability rating. Property owners who are veterans with a 100 percent service-related disability pay no property taxes of any kind.
During fiscal year 2019, the City says it will forgo nearly $52 million in property tax revenue from these exemptions.
Those are generous exemptions, said Albert Uresti, Bexar County’s tax assessor-collector, and a homestead exemption also could ease the tax burden for some.
On a home valued at $100,000, a City homestead exemption of $5,000 would save the property owner about $28 a year. The total estimated lost revenue to the City with a homestead exemption at this level would come to $5.8 million even before factoring in higher-valued homes, according to a staff presentation during the fiscal year 2019 budget cycle.
Revenues from property taxes total $361.9 million, which is 28.7 percent of the City’s $1.26 billion budget for fiscal year 2019.
The factor that most affects property taxes – and taxing entities’ revenues – is rising home values.
In April, the Council approved a contract for a firm to study the Bexar Appraisal District, how it goes about setting values for properties, handles challenges to its appraisals, and compares to other appraisal districts around the state. And in February, Perry 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.
“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 at the time. “I support an analysis of whether a homestead exemption is viable for the City and provides meaningful relief for homeowners.”
State law mandates that any taxing district can increase property tax revenues by up to 8 percent above the prior year’s collection without first gaining voter input and approval.
But a tax overhaul bill already passed in both houses and awaiting the governor’s approval is about to lower that “rollback rate.”
Senate Bill 2 would change the current 8 percent rollback rate to 3.5 percent. Anything above that threshold also would trigger an automatic election. The City of San Antonio rollback rate has averaged 2.6 percent during the past decade and has never gone above 8 percent.
If passed, SB 2 would not necessarily lower property taxes outright, but it would give taxpayers a greater say on rates while possibly slowing local property tax revenue growth.
According to the City’s calculations, if the 3.5 percent cap had been in place over the last 10 years, and voters rejected increases, the City would have collected $137 million less in property taxes, while the savings to the taxpayer for the average home in San Antonio ($178,000) would have been $1.65 a month.