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.
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.”
