For the primary time in additional than three many years, San Antonio metropolis leaders are contemplating elevating the property tax price for the 2026 fiscal yr.
For the typical dwelling inside metropolis limits, valued at $235,000 with a homestead exemption, the change would price the home-owner an additional $57 to $67 on their subsequent property tax invoice.
“The town has not raised the tax price since I used to be in school, so it’s been a while,” Metropolis Supervisor Erik Walsh instructed the Metropolis Council at a price range goal-setting session on Friday. “I think it received’t be a optimistic response.”
Metropolis Council will approve a tax price and price range in September, and have already been spending cuts to stave off a doubtlessly ballooning deficit.
Walsh alerted council members in Might that low shopper confidence was negatively impacting many aspects of metropolis income, together with lodge occupancy tax, the airport improvement providers and residential and business constructing permits.
However property taxes, which account for greater than 1 / 4 of town’s normal fund, have been a comparatively predictable income supply in recent times.
Texas regulation caps the quantity of property tax income cities can accumulate at 3.5% total progress from the earlier yr, not together with new development, and San Antonio simply hit that quantity as property values grew by 22% in 2022, 15% in 2023 and a couple of.4% in 2024.
“We’ve had the posh of getting an upward marketplace for a number of years now, so taxing models may maintain tax charges the identical and nonetheless get extra income from an elevated market values,” mentioned Bexar County’s Chief Appraiser Rogelio Sandoval.
This yr, nonetheless, greater rates of interest and normal shopper uncertainty have contributed to a cooling housing market, and property values have stagnated to the purpose that San Antonio received’t meet the state’s 3.5% progress cap with no price improve.
Sandoval estimated residential properties in San Antonio had solely risen in worth by about 1.5% this yr — a quantity that can lower even additional as householders enchantment their valuations.
“The underside line is, we’re experiencing a flat market, and that has actually put quite a lot of strain on taxing jurisdictions,” Sandoval mentioned. ” … If you’re seeing a stagnant market like we have now seen recently, they’re put able the place in the event that they’re going to attempt to generate extra income, they must contemplate elevating that tax price.”
Homestead exemption right here to remain
Texas’ income cap meant that as property values soared in recent times, cities wanted to cut back their tax charges to conform, or discover different methods to shed income by different focused exemptions.
From the taxpayer’s perspective, property tax payments had been nonetheless rising with their valuations. However the metropolis obtained to take a victory lap on reducing its price a number of instances in recent times, and providing focused property tax reduction to sure teams, akin to seniors, disabled veterans and folks claiming a homestead exemption on their major residence.
San Antonio, which already had a property tax freeze in place for seniors, created its first homestead exemption in 2022, permitting householders to cut back the taxable worth of their major residence — and later elevated it to the utmost 20%.
Regardless of the change in monetary state of affairs, Walsh instructed reporters earlier this yr that San Antonio’s elevated homestead exemption had been a beneficial device to maintain households of their properties, and there have been no plans to reverse that a part of town’s revenue-shedding measures.
“I believe it was unattainable to not do the homestead exemptions,” he mentioned. “It will not have made sense to us, structurally, simply to vary the speed.”
San Antonio’s tax price, nonetheless, is prone to come again up after lowering in 2023 and 2024 and staying even in 2025.
To get the three.5% progress price, town initiatives it will want to lift it from the present 54.159 cents per $100 of valuation to 55.406 cents.
It may legally increase it even greater, to 55.862 cents per $100 of valuation, by rolling over among the improve it didn’t use in earlier years — referred to as the unused increment.
These estimates are topic to vary primarily based on appeals to residents’ property valuations, which can proceed to decrease town’s taxable values all through the summer time.
“There’s quite a lot of work occurring with the Appraisal District proper now,” Walsh instructed the council on Friday. “However because it stands, we’re are anticipating detrimental progress in our base taxable values, which hasn’t occurred for the reason that aftermath of the 2009 recession.”
CPS Vitality income
In line with town’s newest projections, slight enhancements in gross sales tax income and CPS Vitality income had helped ease the pressing want for cuts on this fall’s price range.
However with out large forecasting modifications, town estimates that it may have a greater than $150 million deficit by fiscal yr 2027.
To handle that subject, metropolis leaders mentioned Friday that they needed to press pause on a current plan to reinvest CPS Vitality income into capitol initiatives on the city-owned utility — as a substitute reserving that cash for town’s personal working bills.
CPS Vitality’s potential to promote vitality onto the Texas grid has been one brilliant spot within the metropolis’s income mannequin, and final yr metropolis leaders crafted an settlement to make use of a few of that cash to assist the utility firm stave off future price will increase.
In its first yr town returned about $26 million to the utility firm underneath that coverage, however in a dramatic about-face, town’s Chief Monetary Officer Ben Gorzell mentioned Friday that it ought to maintain off on such reinvestments for the following two years.
Doing so may present roughly $60 million to assist town fill gaps in its price range, based on metropolis projections.
“We at all times need to take a look at our personal monetary place, affect to providers, [and the] affect to the neighborhood,” Gorzell mentioned. “Provided that coverage and the best way we structured it, we’re recommending … to order this $59.3 million to assist us tackle the hole — the numerous hole — that we have now in FY 2027.”
