Appraisal animosity fuels push to increase homestead exemptions in San Antonio
A stalled effort to reduce San Antonio property taxes through increased homestead exemptions suddenly has the wind at its back, as massive increases in home values propel the issue.
City property taxes fund roads, social services and other aspects of the city’s work.
San Antonio has the bare minimum exemption allowed by law, at 0.1% — which results in about a $26 reduction in taxes. It is a miniscule fraction among Texas’ top five largest cities, all others having a 20% homestead.
According to city staff, San Antonio will forgo $72 million in property taxes already through current homestead exemptions, its 65 and older property exemption and exemptions for homeowners who are disabled.
Property values have exploded, rising nearly 20% in the city, according to the Bexar County Appraisal District initial appraisals.
“You'd have to say the huge growth in values of properties is like the straw that broke the camel's back on this particular issue,” said John Courage, District 9 councilman.
Courage, who helped push through the city’s first homestead exemption in 2019, said they haven’t had the momentum to expand the exemption until now.
In its budget goal setting meeting, city staff have pushed to raise the exemption to at least 5%.
Courage is pushing for the maximum exemption allowed at 20%.
“We can afford it,” said Clayton Perry, District 10 councilman.
Tax collections have soared the past 10 years on rising appraisals. So even though the city hasn’t raised taxes and has actually cut the tax rate.
Perry said he had virtually no support when he tried to get an exemption back in 2017, but now everyone is feeling the push from homeowners to do something.
“The city alone, we got over $20 million extra this year in 2022 on property taxes,” he said.
Whether the city can afford it or not, homeowners hit with massive increases in property values are incensed and not keeping it to themselves.
It’s all hands on deck at the Bexar County Appraisal District office as homeowners called in to ask questions and complain. The office added dozens of phone lines, and staff said they had 300 people waiting on hold last week.
This week is quieter but still busy as several customer service representatives walked people through their appraisals and the protest process. The chief appraiser expects 160,000 challenges from homeowners that will have to be resolved and will reduce the amount of collection.
The city is required to cut its tax rate under state law so its revenue grows only 3.5%. A 20% homestead expansion would have a big impact on that revenue conversation.
“That would be massively huge,” said Michael Amezquita, the chief appraiser. “Currently, 52% of all homesteads are already capped. If they had a 20% homestead exemption, then we would be on par not only with our neighbors to the north and Comal? County, and it's in the city of New Braunfels. But we would be equal to Houston, Dallas and Austin, in terms of the protection we offer our taxpayers.”
But those tax savings will not be felt equitably. Property taxes in Texas are flat, regressive ones where the people who can afford them the least see the least savings from a homestead exemption. Wealthy districts represented by councilmen Perry and Courage are likely to see the lion’s share of the savings. The state bars local taxing jurisdictions from progressively taxing or exempting.
In District 2, which has seen an influx of redevelopment and gentrification, Councilman Jalen McKee-Rodriguez would like to see different strategies to try and make the savings more equitable. But currently he feels like he has to support a 20% exemption expansion because it almost doesn’t make sense for his constituents unless you go to the max.
“If we were to just move up to 5%, then most of the people in my community would not see any changes,” said McKee-Rodriguez.
His support is contingent on not cutting services though.
Therein lies the rub.
Projections from the appraisal district suggest that a 20% cut could lead to a revenue reduction of nearly $60 million — or about $40 million more than new revenue from property taxes.
All these numbers will be revised multiple times before the city votes on its tax rate and a possible expansion of the homestead exemption.
City property taxes represent around 20% of most people’s property tax burden. There are usually a half dozen other taxing jurisdictions, and city taxes are often second only to school districts, which are often two to three times higher.
Courage and Perry are hoping bold city action leads to a domino of exemptions in these other areas. It isn’t clear how successful they could be. But the current animosities of homeowners can only fuel their efforts.
Additional reporting was contributed by Brian Kirkpatrick.