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San Antonio leaders mull options for property tax relief as Gov. Abbott signs reform package into law

City finance leaders presented councilmembers with exemption possibilities for San Antonio residents, efforts now made more difficult after the passing of SB2.

SAN ANTONIO — On the same day that Texas Gov. Greg Abbott signed into law a bill capping annual property tax increases for local municipalities, San Antonio finance officials cited the legislation as a reason why the city’s fiscal “parameters have really changed” ahead of a goal-setting session for next year’s budget.

Senate Bill 2 requires an election to be held if cities or counties seek to raise property taxes by more than 3.5%. The law goes into effect next year. At Wednesday afternoon’s City Council B Session, City of San Antonio CFO Ben Gorzell said the bill would start necessary conversation surrounding property tax management in the Alamo City, citing the potential impact from credit rating agencies.  

“SB 2 is a really big, fundamental change in terms of how we’ll look at property taxes,” Gorzell said. He added that if the 3.5% cap – a figure that was previously 8% – had been in place for the past decade, the city would have raised $81 million less. Further, if the rate had been in place, the city’s tax rate today would have been about 31 cents per $100 of taxable value. Currently it stands at just under 35 cents.

Gorzell said that while the bulk of the city’s current financial policies could remain unchanged, his team came up with options for council members to consider ahead of a budget goal-setting session – currently set for June 21 – to adjust in the wake of Senate Bill 2.

Among them: Adjusting the property tax rate to state-mandated limit on a yearly basis (specifically for those years when the property tax rate is less than 3.5%, which Gorzell said hasn’t been the case in recent years). Another option is annually reviewing the impact of the new tax rate cap, and then making recommendations based on how it’ll affect the wallets of taxpayers.

Gorzell said those options are a way to “offset the impact (of SB2). This is a big change from 8% to 3.5%. This would give you a tool to manage this in the context of our budget.”

Mayor Ron Nirenberg called the presentation “sobering,” adding that – whatever city leaders ultimately decide – it’s important to remain flexible. One looming reason: The city is continuously working to provide property tax relief for its residents, an effort now made tougher with Senate Bill 2.

"We’re trying to provide property tax relief to our most vulnerable residents,” Nirenberg said. “And, unfortunately, the state legislature has not provided us with the best tools to do that.”

Specifically, council members John Courage and Clayton Perry asked city finance personnel to look into three things: increasing the tax exemption for residents 65 and older, which currently stands at $65,000; increasing the tax exemption for residents with disabilities, currently at $12,500; and creating a general exemption for San Antonio homeowners, established as a percentage and applicable to all homes, regardless of their value.

Gorzell offered four potential exemption scenarios pertaining to all homeowners, focusing on possible exemptions of .01%, 5%, 10% and 20%. For an average city home – which, according to the city finance team, costs about $179,000 – a .01% exemption would save families $28 a year on a $999 city tax bill, while a 10% exemption would save about $100. 

And, the higher the potential exemption rate, the higher the total revenue loss to the city (a potential .01% exemption would amount to about $5.87 million in revenue losses for San Antonio).

Any new exemptions the city council decides to adopt must be made ahead of July to be in effect for the next fiscal year. Nirenberg said the council will take action on their options on June 21, but indicated he’s “open to an exemption.”

Councilwoman Ana Sandoval echoed the sentiment. “There’s no doubt homeowners are coming to us requesting some kind of relief,” she said.

Perry said that – in addition to crime and infrastructure – property taxes were one of the key points of conversation among constituents during this year’s election.

“As you know, I’ve been pushing for a homestead exemption for the last couple of years,” Perry said. “People are really really clamoring for that.”

Councilmembers Rey Saldaña and Shirley Gonzales, meanwhile, advocated for holding firm on current financial policies. Gozales noted she felt there is “a lot of uncertainty in our budget.”

Saldaña made a point about reckoning between tax relief for different parts of San Antonio’s population, saying that wealth discrepancy needs to be taken into account.

“If you were making an argument on who needs tax relief the most, there would be folks in my district who need that,” he said. “I just don’t know how you’d go across the board and say, ‘Rich folks need as much tax relief as the poor folks.’ I think that’s a really difficult conversation.”

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