The Kyle City Council passed an ordinance adopting a general $40,000 homestead exemption for all homeowners in the city of Kyle at a special City Council meeting June 25. The ordinance includes an additional $10,000 in exemptions for residents age 65 and older, residents with disabilities and veterans. However, the exemptions cannot exceed 20% of an individual home's assessed value.

The only exemption prior to this meeting was $30,000 for residents 65 and older; that exemption has now been reduced to $10,000 but can be stacked with the $40,000 general exemption for a combined total of $50,000.

The city of Kyle is just one of many cities that have discussed and approved additional exemptions as property values continue to rise across Texas.

The discussion of homestead exemptions was brought up at a meeting June 7, and the council moved to add homestead exemption analysis to the upcoming budgeting sessions, though the council moved quicker and called the special meeting to discuss and pass the new exemptions.

“We knew that there’s a big struggle out there with everybody with home prices and also with daily living expenses. I know our tax base has not increased over the years, ... but the property values in Kyle have skyrocketed,” Council Member Michale Tobias said.

During the discussion, the council had two options before them regarding the amount for a potential exemption: a fixed dollar value or a percentage.

“If I had to choose between a fixed amount of exemption versus a percentage, ... my recommendation would be we take a fixed exemption amount,” Director of Finance Perwez Moheet said. “On a percentage basis, the calculation for the exemption amount is based on the taxable assessed evaluation of that homeowner's homestead. One, it will fluctuate each year. ... Secondly, equity. So, the higher the home value, the more exemption they get.”

About 30% of the fiscal year 2021-22 budget comes from property taxes and with the drop in revenue as a result of the exemptions, the council and city staff will have to decide where the FY 2022-23 budget will be cut to offset the losses.

“I don’t necessarily consider this motion to be one penny of tax relief to the community. I believe it is more along the lines of shifting the tax burden from one group of people to another,” Mayor Travis Mitchell said. “If we’re not going to collect [taxes] from the homeowners who own homes, then we have two choices: We either reduce services, ... or we increase the tax rate.”

The next budget work session will be July 7 at 5:30 p.m. at City Hall, located at 100 W. Center St., Kyle.