San Antonio City Council voted unanimously Thursday to increase the homestead exemption from city property taxes to 10% of the home’s assessed value, effective on 2022 tax bills. It also approved increases to the exemptions disabled people and people aged 65 and up can apply to their property taxes.
“The entire community, the whole state, frankly, the nation, is feeling this pressure and burden at the worst possible time,” Mayor Ron Nirenberg said of higher property tax bills that are arriving in the midst of high inflation and an uncertain economy.
“The city council and the city staff are working very hard to find ways using our limited levers that we can pull to provide relief to do so in the most equitable and fair manner,” he added.
Under the new exemption, the owner of a home with an assessed value of $300,000 would see about about $164 in total savings, according to the San Antonio Board of Realtors.
San Antonio has long focused its property tax relief measures on seniors, freezing the amount those 65 and older pay as long as the property is occupied by the homestead owner.
Until Thursday, San Antonio had the lowest homestead exemption allowed, .01% of the home’s assessed value, or $5,000. It abandoned a proposal to increase the homestead exemption to 5% last year, while other major Texas cities maxed out their homestead exemptions, which are capped by state law at 20%.
“Councilman [Clayton] Perry and I have been advocates for what we consider tax relief since we both got on the council five years ago,” said Councilman John Courage (D9). “But we’ve gone through some really challenging times. … No one can question what the pandemic did for the economic stability of of our community.”
Today, the city is flush with cash, thanks to federal relief money and increased property tax and sales tax revenue.
San Antonio received $327 million in the American Rescue Plan Act Congress passed to help local governments recover from the pandemic, the third round of federal relief money.
As property valuations skyrocket, San Antonio and other cities are being forced to find ways to reduce their revenue to comply with a 2019 Texas law that caps property tax revenue from growing by more than 3.5% over the previous year. If they don’t, they could be forced to hold an election that would allow taxpayers to vote on lowering the tax rate. The city anticipates a budget of $1.3 billion for the 2023 fiscal year.
Rather than pursue the full 20% homestead exemption to reduce revenue, Chief Financial Officer Ben Gorzell Jr. told reporters Thursday that San Antonio plans to lower the city’s property tax rate this fall.
“With the homestead exemption we can only influence those homeowners, but outside of that group, you’ve got small business owners, you’ve got landlords that own rental properties, you’ve got other commercial customers,” said Gorzell. “We’re trying to give everybody some level of relief.”
Cities have limited options to direct property tax relief toward specific groups of people. Aside from the homestead exemption, which must be done on a percentage basis, the city can raise exemptions for people who are disabled or age 65 and up.
Thursday’s plan allows people 65 years of age and older claiming a homestead exemption to reduce the assessed value of their home by up to $85,000 — an increase from $65,000 in previous years. It also allows people who are fully disabled and receive benefits under Federal Old-Age, Survivors and Disability Insurance to claim an exemption worth up to $85,000, up from $12,500 in previous years.
San Antonio plans to lobby the state Legislature for permission to include some other targeted groups when it convenes in 2023, said Deputy Chief Financial Officer Troy Elliott.
“Some of the things we’ve … had conversations about is legacy homeownership, so maybe being able to make an exemption that is higher for people who have been in their homestead for a longer period of time,” Elliot told reporters Thursday.
Elliot said San Antonio could explore raising the homestead exemption next year if its unsuccessful getting permission for new exemptions.