Updated June 29, 3:05 p.m.

Austin taxpayers will find more relief after City Council approved increasing the homestead exemption from 6 percent to 8 percent during a June 29 special meeting.

The increase applies to the tax year starting Jan. 1, 2016, and will cost the city $3.8 million. However, staffers reported the city is anticipating a budget surplus of $2 million, meaning the city will only take a $1.8 million revenue hit.

That decreased revenue is why some council members opposed increasing the homestead exemption. District 9 Council Member Kathie Tovo said an increase would benefit many of her constituents but that she sees other needs for the loss in revenue.

"This is going to be a tough budget cycle," she said. "I’m really concerned about how some of those needs will get funded if we start the budget process with almost $2 million in hole."

Those opposed to the increase said it would hurt lower-income residents and that the city could fund other much-needed services with $3.8 million.

"We know, for example, these after-school programs [previously mentioned] are running out because 21st-century grants are running out at some of our schools," District 4 Council Member Greg Casar said. "I think the city would be an appropriate person to take up funding some of those critical after-school programs."

Those in favor of the increased homestead exemption say they intend to remain committed to achieving a 20 percent homestead exemption in four years, as supported in 2015.

"Just on Thursday night at one council meeting we authorized the spending of $29 million," District 10 Sheri Gallo said. "I think we are able and I think we can be able to find resources to fund this."

District 8 Council Member Ellen Troxclair said it is not just low-income residents who are asking for tax relief but also moderate-income residents and seniors.

"The idea this is something that benefits the rich more than the poor doesn't make any sense to me because the people who are coming to me on a consistent basis begging for some kind of relief from the constant cost-of-living increases in Austin, they're not rich people. They're people who are struggling to stay in their homes," she said.

Updated June 24, 8:45 p.m.

The city of Austin could take an approximately $3.8 million hit to revenue if Austin City Council decides eligible taxpayers are due to receive a higher percentage of property tax relief.

City Council voted on first and second reading during a June 23 special-called meeting to approve a 2 percent increase, from 6 to 8 percent, to the city's homestead exemption. Council Member Greg Casar agreed to reconsider his initial "nay" vote so council would only have to meet one more time for a final vote on the increased exemption. This changed the vote to 7-4.

Another special called meeting has been set for June 29 at 1 p.m. for the vote on the third, or final, reading.

If approved, the increase would save taxpayers $9.18 per $100,000 of assessed value per year, according to city documents. Houston, Dallas and San Antonio all have 20 percent general homestead exemptions.

Taxpayers who use their home—whether it is a detached structure, condominium or mobile home—as their main residence can qualify for a homestead exemption, which grants them a percentage of property tax relief. For example, a taxpayer whose residence is assessed at $200,000 and who receives a homestead exemption would pay property taxes as if the home were worth $184,000.

District 2 Council Member Delia Garza said she is against any homestead exemptions and would prefer council would go down to a 0 percent exemption.

“It hurts those who need the relief the most,” she said. “Low-income families get the minimum benefit from this, and it gives the most benefit to the wealthiest.”

Council Member Sabino "Pio" Renteria said he agreed with her and is against an increase to prevent hurting low-income residents with a regressive tax.

Council Member Kathie Tovo said any increase in the homestead exemption would require cutting services.

“As we consider increases, it would be helpful to balance that with what services would need to be trimmed,” she said. “I’m not sure how to pay for [an increase].”

But other council members pointed to council’s vote in 2015 to ultimately achieve a 20 percent homestead exemption. District 10 Council Member Sheri Gallo said achieving a 20 percent exemption could have an impact on helping senior citizens age in place.

“I think it’s important to maintain our commitments to the community,” she said. “We’re seeing property values explode … and as a result property taxes are increasing.”

Two other motions to increase the homestead exemption by either 14 percent or 4 percent failed.

Mayor Steve Adler said the city has done a lot for low-income residents, such as providing more affordable housing. He said affordability affects people at all levels of income in the city.

“We have to help everybody, and not one total is going to help everybody,” he said. “This is one way we can do that.”

This post has been updated to reflect the June 24 vote on the homestead exemption was only on first and second reading. The final vote for approval was June 29.