Hollywood Park City Council got its first briefing on how a senior property tax freeze might affect the city, with some local officials fearing this form of tax relief could yield negative results for the town’s finances.
City Treasurer Fred Timmons gave a presentation Oct. 18 involving projected budget expenses and property tax revenues for fiscal year 2022-23 and through the next three years.
Timmons also presented Bexar County Appraisal District data with total property valuations for residents age 65 and over as well as those under age 65.
He also provided projected figures in the case of continued inflation, a potential recession, flat property values and an increase in costs of living adjustment for city services.
Council talks on the senior citizen tax freeze concept were sparked in comments made by resident Shannon Sims in an August council meeting.
Moved by skyrocketing appraisals and inflation, more and more communities are looking into wider forms of local tax relief.
Sims said more forms of tax relief could benefit local senior citizens; the U.S. Census counted 818 residents age 65 and over, but the Oct. 18 presentation was missing a count of Hollywood Park homeowners age 65 and over.
The city offers a $5,000 exemption for senior citizen taxpayers, who must apply with the city to obtain it.
According to Timmons, if the city were to implement a senior tax freeze next fall for FY 2023-24, the city’s general operating fund is projected to receive $3.34 million in property tax revenue, whereas, without a freeze, the city would collect $3.39 million.
Given other revenues, the city would project a total of $5.6 million in income with a tax freeze and $5.65 million without a freeze, Timmons said.
Throw in a 4% cost of living increase and other expenses in FY 2023-24, and the city could be in a budget deficit of $51,459 with a tax freeze or $1,187 without a freeze, Timmons said.
Timmons said even with a cost of living increase, a slight rise in property values and a tax freeze, a budget deficit could accumulate over time and reach $207,091 by 2026.
Some local officials voiced concern a budget deficit as projected in Timmons’ presentation could trigger repercussions for the city’s finances.
“If we do a freeze, then there’s no money for streets being accumulated. There is no money to pay off the bonds early. We’re not building up reserves, and if we operate off of these deficits, that will have an effect on our bond rating, and we’ll see our reserves decreasing,” Timmons said.
Attending the Oct. 18 council meeting, Sims said she met with Timmons and agreed that some of the biggest challenges in considering a senior tax freeze are verifying the total numbers of local households and of senior taxpayers. She added that a tax freeze does not travel with the taxpayer if they were to relocate.
Sims said she still hopes the city mulls a senior tax freeze, adding that many residents age 65 and older are on fixed incomes and may be struggling with rising personal expenses, especially if they have a mortgage.
Resident Mark Cotten echoed Sims’ worries.
“I do support a freeze. If we have enough money to cover roads and bonds, then maybe we can get a homestead exemption for under [age] 65,” Cotten said.
But resident Martha Sanchez said while a tax freeze could benefit those over age 65, the potential impact to the city’s budget over a number of years is something significant to keep in mind.
Mayor Sean Moore said he fears a tax freeze in a small, landlocked city, such as Hollywood Park, could bring about a budget deficit, which in turn jeopardizes financial reserves and availability of money for a potential road and drainage program.
“So you immediately talk about dipping into your reserves, but when it comes to infrastructure opportunities at that point, you’re pretty much out of luck,” Moore said.
Moore also said a tax freeze shifts the city’s taxing burden onto younger residents, and that burden grows each year. Moore added if the city adopts a tax freeze, it’s permanent.
Council Member Glenna Pearce said it is true that many older people are on a fixed income and could benefit from a tax freeze, but that in many cases, considering and approving a tax freeze should be more of an objective decision and less of an emotional issue.
“We need to look at the facts and the health of our city.” Pearce said.
Moore and other city leaders said tax exemption thresholds, on the other hand, can be changed and give the city more flexibility instead of a tax freeze.
“What scares me about a freeze is we don’t know how many households will apply to a freeze, and we’d be making a big change,” Council Member Wendy Gonzalez said.
She added a negative shift in the housing market could produce a drop in property values, which might save some money for taxpayers but could adversely affect the coffers of smaller cities, such as Hollywood Park.
Moore also said a tax freeze could force the city to cut back on city services, affecting a level of quality of life that many residents say they enjoy.
“It’s why part of your property taxes are tied to the fact that we have such good public city services,” Moore added.
Council Member Chester Drash said local officials in the next budgeting cycle could see where they cut back a bit in some budgeted spending, but the city is looking to develop a road program, and it is landlocked, so opportunities for additional revenues are limited.
“We’ve got some financial decisions to make,” Drash said.
Council Member Michael Voorhies said he can see both sides of the issue.
“That makes a difference, if you have a mortgage and are on a fixed income and prices keep going up,” he added.
Council Member Todd Kounse said additional tax relief and streamlining budgeted expenditures are solid measures, but maintaining an adequate amount of funding for basic services, namely public safety and infrastructures, should be the city’s priority.
“I’d like to see what we can do with exemptions,” Kounse said.
