A decision must be made by July 1. If council votes to maintain the current exemption, it will be the first time in five years it has decided against an increase.
The estimated market value of a senior’s home in Richardson is about $316,662, which is up 5% year over year, city Finance Director Keith Dagen said. The city estimates that nearly 8,500 accounts, or 30% of all homes in Richardson, will be eligible for the senior exemption in 2020, Dagen said.
Under the current exemption, each $5,000 increment of the average senior’s home value translates to about a $31.26 savings in property taxes. For a home valued at $100,000, that amounts to about $625 in savings, Dagen said.
Each year, council reviews the exemption to ensure it meets the city’s goal of providing a tax benefit of approximately 30% of the average senior home value. Last year, City Council voted to increase the exemption from $85,000 to $100,000.
After reviewing last year’s certified values, Dagen said the average senior is actually receiving a 33% benefit, giving the city some flexibility to keep the current exemption while also maintaining its exemption goal.
The finance team recommended keeping the exemption where it is, noting that the average market value would need to increase by 11% before the $100,000 exemption would fall below the city’s 30% goal.
Senate Bill 2 changes the way the city looks at exemptions, Dagen said. Any increase to an exemption or to the number of qualifying taxpayers will not only constrain revenues but also reduce the 3.5% revenue growth limit enforced by SB 2, he said.
Keeping the exemption where it is rolls the city’s revenue growth limit back from 3.5% to 3.3%, Dagen said. If the city were to increase the exemption to $105,000, that would lower its allowable revenue growth to 3.07%.
The exempted taxes will total $5.3 million in 2020, Dagen said. This is up from $5.1 million last year due to the growth in the number of senior accounts, he said. The incremental cost to the city is $179,911, most of which is paid for through its general fund.
“Notice there are no changes in the exemption amount, but with more participants we still have downward pressure,” City Manager Dan Johnson said.
Mayor Paul Voelker recommended further analysis of other exemptions and how adjustments might influence the 3.5% cap.
“We have knobs we can continue to turn, and we will do an effective job at turning those because we are committed to the financial management we’ve been so proud of,” he said.