How much could you save? First look at the city’s property tax relief package

SAN ANTONIO – City leaders have said property tax relief is coming, and now property owners in San Antonio are getting their first peek at what it could look like.

As part of early budget discussions for FY 2023, city staff presented city council on Wednesday with an array of recommended property tax relief measures.

Deputy City Financial Officer Troy Elliott said his team looked at about 15 scenarios before settling on this mix:

  • RAISING the homestead exemption from 0.01% ($ 5,000 minimum) to 10%

  • RAISING the exemption for 65 and over from $ 65,000 to $ 85,000

  • RAISING the exemption for disabled persons from $ 12,500 to $ 85,000

  • LOWERING the property tax rate by an estimated 1.3 cents per $ 100 valuation

The exemptions would have to be approved before July and are scheduled for a vote during a June 16 council meeting. The tax rate will be set when the council passes the FY 2023 budget in September.

Elliott stressed that lowering the tax rate from $ 0.55827 to $ 0.54504, as laid out in his presentation, was just a preliminary estimate, and will change depending on where the certified tax rolls land after property appraisal appeals finish.

San Antonio property owners have been clamoring for relief as sky-high appraisals have arrived in their mailboxes. But it’s not just voters’ pleas for help prompting city leaders to take action.

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State law caps how much additional property tax revenue cities may take in compared to the previous year. The property tax revenue the city takes in for maintenance and operations can only grow by 3.5%, excluding new construction.

If the city adopts a tax rate that would put it above that cap, it would trigger an automatic election on that tax rate.

With the city estimating the citywide growth in taxable value at 14.1%, that means the city has to find ways to lower the amount of tax revenue it collects next year.

Though there’s a way to temporarily push up the cap, based on previous years when tax revenues fell short of the cap, it’s not something staff is currently recommending.

The proposed changes could mean a homeowner with a house that was assessed at $ 200,000 in 2021 could end up paying $ 10 less on their city property tax bill this year, even if the taxable value of their home went up to $ 220,000.

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The estimated additional savings from the homestead exemption alone, city staff say, could range from $ 28 for a $ 100,000 home to $ 300 for a $ 600,000 home.

This slide, presented to city council on May 11, shows the additional savings homeowners would get by raising the homestead exemption from 0.01% to 10% (City of San Antonio)

While homeowners who are either disabled or 65 years and older already have a tax freeze that prohibits their city tax bill from going up, the increased exemption could push their tax bill below that freeze level at least temporarily.

Council members appeared generally supportive of the plan, though District 3 Councilwoman Phyllis Viagran had concerns about what effect tax relief could have on the city’s ability to provide services.

The city estimates that tax relief measures like the increased exemptions and the existing freeze would provide city residents a combined $ 93.8 million in relief in FY 2023, compared to $ 72.4 million this year. The estimate does not take into account lowering the tax rate.

I would like to see if in the five-year forecast, if we did not have (the homestead exemption) at 10%, but maybe 7% or 5% – would that lower our our public safety budget in the long term, ” Viagran said.

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City Manager Erik Walsh, though, said the city is able to afford the tax relief.

“I think had we seen that the 10% property exemption created a pinch inappropriately that is not manageable, we would not have put the 10%,” Walsh said.

Elliott also confirmed that the relief plan was calculated to put the city right under the 3.5% cap.

While the homestead exemption, which lowers the taxable value of the home you live in, could be raised up to a maximum of 20%, Elliott said that would not have left much room to lower the property tax rate, which affects all properties.

“Our goals were kind of focused on homestead relief, but also balanced relief among all property holders,” Elliott said. “So when we went to 20%, the way it impacts the tax rate is it moves the tax rate up almost equivalent to what the tax rate is today. And so that would not be providing any relief to commercial account holders, our multifamily. ”

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City staff provide an example of how a home worth $ 200,000 in 2021 and $ 230,000 in 2022 might be affected by a 10% homestead exemption and lower tax rate. (City of San Antonio)
City staff provided an example of how a recent senior would be affected by the proposed property tax relief. (City of San Antonio)

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