After a debate, Jersey Village City County opted to table an agenda item at the Oct. 15 regular council meeting that called for raising the city's homestead exemption from 8 percent to the 20 percent maximum. The council plans to pick up the discussion at a workshop in January and will possibly revisit the issue at its regular February meeting.
The agenda item was proposed by Council Member Bobby Warren, who said the city's residents have not seen any form of tax relief in 15 years.
"All revenue streams have been on an upward trend for years now, and we have reduced our debt payments," Warren said at the Oct. 15 meeting. "If we are not on solid enough footing to provide a tax break now, I fail to see what conditions would be necessary before we would act to stem the tide of rising property tax bills."
Homestead exemptions are a form of property tax relief in Texas. Residents are allowed to deduct a certain amount of value from a home's appraised value before calculating the property tax that is owed on that home.
For example, a home with an appraised value of $216,600—the median home value in Jersey Village, according to the U.S. Census—when subject to the city's property tax rate of $0.7425 per $100 of valuation, would rack up $1,608.25 in property taxes owed. However, when the city's 8 percent homestead exemption is factored in, the value the home is taxed at drops to $199,272, and the taxes owed fall to $1,479.80.
With a 20 percent homestead exemption, the taxable value drops even further to $173,280, and the taxes owed fall to $1,286.75, a difference of $193.05.
Although the city has not raised it's property tax rate for 11 years, Warren said homeowners in Jersey Village have seen their tax bills rise along with sharp increases in home values. As a result, the city's property tax levy rose from $6.4 million in 2013 to $7.9 million in 2017, according to data compiled by the state comptroller's office.
Warren said sales tax revenue has been rising as well, despite past predictions that Hwy. 290 construction would hurt sales tax revenue. Warren has told Community Impact Newspaper in the past that he would like to see the city reduce its reliance on property tax revenue as sales tax revenue grows.
"Construction on Hwy. 290 in Jersey Village is substantially complete, [and] our sales tax revenue is clearly in no danger of evaporating any time soon," Warren said at the Oct. 15 meeting. "If anything, in this thriving economy, it is likely to grow at an increasing rate."
The move would cost the city an estimated $550,000 per year in revenue, Warren said.
Other Jersey Village council members expressed willingness to increase the homestead exemption. However, the four council members aside from Warren, as well as Mayor Justin Ray, all said they did not see a reason to make a decision so early in the fiscal year. If passed at the Oct. 15 meeting, the homestead exemption would not go into effect until 2019 and would not be seen by taxpayers until 2020.
Council Member Greg Holden said maintaining a healthy level of fund reserves gives the city flexibility in how it conducts future capital improvement projects. City reserves are estimated at $17.5 million, but this number is expected to drop in the coming years as the city uses its reserves to fund capital projects, such as a new convention center at the Jersey Meadow Golf Course and a new City Hall.
"These types of discussions need to take place during a budget process when we can look at the [Capital Improvement] Plan on a 5- to 10-year basis and really look at projects we need to put into that plan," Holden said. "We cherry picked things out of the comprehensive plan. Now, it’s time to go back and see what else we need to do."
Holden also brought up several other questions he would like to see explored before a decision is made, including whether the city should use some of its funds to increase pay for city staff and to what extent the city should consider increasing homestead exemptions for disabled residents and residents over 65 years of age.
Ray wrapped up the discussion by directing council members to send any questions or requests for more information to city staff in preparation for a January workshop, where council will continue to discuss the homestead exemption. A decision could be made as soon as the February council meeting.