Sky-high property appraisals could prompt a higher homestead exemption for SA homeowners

City of San Antonio will need to cut its property tax revenues to stay under a state cap

San Antonio – As eye-opening property appraisals arrive in mailboxes across the City of San Antonio, an increase to the city’s homestead exemption could be close behind.

Council members met Wednesday to discuss their priorities for the FY 2023 budget, which will run from October 2022 through September 2023. The meeting comes less than a week after the Bexar County Appraisal District mailed out new appraisals, which put the average value of a single-family home up by an average of nearly 28%.

“You will note...that there will be tax relief this year. And so part of that discussion is how we handle the options that will be presented by staff,” Mayor Ron Nirenberg said at the beginning of the meeting.

One option discussed at the meeting was increasing the city’s homestead exemption, which reduces the taxable value of the home a person lives in and lowers how much they’re taxed for it on the city portion of their tax bill.

The city passed the minimum exemption possible -- .01% or a flat $5,000 -- in 2019. That worked out at the time to be about a $28 annual savings for the average homeowner.

District 10 Councilman Clayton Perry and District 9 Councilman John Courage pushed last year to raise the exemption up to 5%, but they lacked the support.

However, tax relief was a common theme as council members discussed their priorities for the FY 2023 budget and Perry said he was “pretty confident” the council would end up raising the exemption.

“I think they’re getting a lot of complaints, just like everybody else, when people are opening those envelopes and seeing their property taxes going up as much as it is this year,” Perry said of his fellow council members.

Helping the discussion is the fact that the city needs to find a way to cut its property tax revenues anyways, since the ballooning appraisals are projected to push revenues past a state-mandated cap for the first time since the Texas Legislature lowered it in 2019.

Senate Bill 2, which took effect in January 2020, limits the amount of new property tax revenue the city can collect for the general fund to 3.5% over the year before, excluding new construction. The cap had been previously been set at 8%.

Going over that cap would trigger an automatic election in which voters would have to approve the tax rate.

There is an option to temporarily increase the revenue cap, but it still wouldn’t bring the city close to the 13.8% increase in property tax valuation city staff are currently projecting.

That means the city will somehow have to lower its revenues through measures like the homestead exemption, cutting its tax rate, or a combination.

This slide, presented to city council on April 13, shows an estimated 13.8 percent increase in its base property tax valuation. State law caps that increase at 3.5 percent in a single year. (City of San Antonio)

“In periods of this rising value like this, it is going to be easier to implement homestead exemption, provide that relief to our residents,” said Deputy Chief Financial Officer Troy Elliott.

With the appraisal protest process just starting, city staff don’t yet know how much raising the homestead exemption could reduce property tax revenues.

Staff are recommending increasing the exemption to at least 5%, which would save the average homeowner another $35 per year.

The maximum exemption allowed is 20%.

To have a larger homestead exemption apply toward San Antonio homeowners’ 2022 property tax bills, the city council must pass an increase before July 1.

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About the Authors

Garrett Brnger is a reporter with KSAT 12.

Before starting at KSAT in August 2011, Ken was a news photographer at KENS. Before that he was a news photographer at KVDA TV in San Antonio. Ken graduated from San Antonio College with an associate's degree in Radio, TV and Film. Ken has won a Sun Coast Emmy and four Lone Star Emmys. Ken has been in the TV industry since 1994.

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