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HomeMy WebLinkAboutCP 74 U won Pa POLICY PROPOSAL DATE - FILE NUMBER SUBJECT PAGE 1 OF 3 10/30/80 CP-74 Homestead Exemption Ad Valorem Tax PROPOSAL PROPOSED BY: CITY MANAGER'S REVIEW Councilman Jeff Davis . C. �L City-wide equalization of the property tax base is required by the State Con- stitution ("equal and uniform") , and is specifically mandated by the new Property Tax Code for every jurisdiction in the State of Texas by 1982. One of the unpleasant results of revaluation of the property tax base is that many homeowners may face extreme tax increases. Besides being politically undesire- able, in many cases reevaluation appears to be economically unfair to homeowners whose incomes, enjoyment of their homes, or receipt of municipal services have not increased ,0ow as dramatically as the market value of their home. Periodic revaluation of property, a responsibility of every taxing jurisdiction, is mandated by Article 8, Section 1 of the Texas Constitution, which requires that M taxation shall be equal and uniform and that all property shall be taxed in proportion to its value. The new Property Tax Code reiterates the requirement for equalization at market value, thus every taxing jurisdiction in the State can expect some shifts in the tax burden between different classes of taxpayers. Current estimates are that homes have increased in value anywhere from 1 to A percent per month over the past five years. Thus, the values of residential home- steads may be increasing at a faster rate than those of the other classifications of property wiIhin the property tax base. As a result, if valuations are kept current as required by the Property Tax Code, homeowners will begin picking up an ever LEGALITY EI FISCAL NOTE CRY MANAGER'S COMMENTS] p)�b POLICY PROPOSAL (cont'd) /AGE?OF 3 increasing share of the property tax burden. Without some Constitutional tools to deal with the assessment and revaluation pro- cess in advance of the crisis, property tax administration state-wide is going to be an extraordinarily painful process. There must be a Constitutional avenue for fair tax relief so that each individual taxing entity can tailor its own system in such a way as to avoid political, legal, or economic catastrophe. School districts in Texas now have a $5,000 exemption from taxes on homesteads. I would like to propose that local communities in Texas be permitted to provide a residential homestead exemption up to 20% of the market value, with authority to establish a dollar limitation on the amount exempted. This would insure that, with the exception of $5,000 and under homes, everyone owning a home would pay some taxes and would also allow a reduction in the homeowners burden accomplished by the local jurisdiction. I propose that the City Council adopt the attached resolution and that Councilman Williams be authorized to present it to the Resolution Committee of the Texas Municipal League as the official position of the City of Fort Worth. Legality No comment required. Fiscal Note It is estimated that a $5,000 market value exemption would reduce revenues by $2,330,000 annually based on the present tax and assessment rate. The revenues lost would need to be -recovered from some other source or service level reductions would probably result. CITY OF FORT WORTH 'AdE_OF POLICY PROPOSAL (cont'd) City Manager's Comments. The proposal represents a policy matter which should require serious evaluation by the' Council in view of the fiscal implications. Councilman Jeff Davis District'4 r s APPROVED• BY CITY COUNCIL DEC 29 ISM CI eczaSuiy ®� t 8 C of lost Wy of CRY OF FORT WORTH A Resolution WHEREAS, the effects of spiralling inflation on property values have I increased the tax burdens on residential homestead property owners; and WHEREAS, residential homestead property has no income producing cap- ability to compensate for the inflationary trend; and WHEREAS, the City Council has ascertained a need for tax relief to soften the impact on homeowners of these rising property values; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH: SECTION 1. That the City Council hereby urges the adoption of an I amendment to the Texas Constitution that would allow local communities to j provide a residential homestead exemption from ad valorem taxes of not i less than $5,000 of the market value nor more than 20 percent of the market value with authority to establish a dollar limitation on the amount exempted. SECTION 2. That the Mayor shall transmit this resolution to Governnor Clements and to all Fort Worth members of the State Legislature. SECTION 3. That Councilman Williams shall transmit this resolution to the Resolutions Committee of the Texas Municipal League. SECTION 4. That this resolution shall take effect immediately from and after passage in accordance with the provisions of the Charter, and it is accordingly so resolved. a= OF FORT WORTH .