HomeMy WebLinkAboutCP 260 CIT FO WO , TEXAS
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COUNCIL PROPOSAL
Date:2120107 File Number: Subject Council Proposal to Direct Staff to Prepare an Ordinance to Implement a Freeze on the Amount
260 of Property Taxes Imposed on Residential Homesteads Owned by Persons Aged 65 and Over and
Persons with Disabilities in accordance with Article Vlll,Sec.1-b(h)of the Texas Constitution
Proposed By;Chuck Silcox City Manager's Review Page:
City Attorney's Review PAGE I OF 3
It is proposed that the City Council direct staff to prepare an ordinance establishing a freeze on
the amount of property taxes imposed on residential homesteads owned by persons aged 65 and
over and persons with disabilities, in accordance with Texas Constitution,Art.VIII, Sec. I-b(h).
DISCUSSION:
In 2003, Texas voters adopted an amendment to the Texas Constitution which allowed a county,
city or town, or a junior college district to freeze the total amount of ad valorem taxes imposed
on the homesteads of persons with disabilities or persons sixty-five years of age or older.
The constitutional amendment provides that the tax freeze on city property taxes can be
implemented by official action of the governing body of the city. In the alternative, upon receipt
of a petition signed by 5% of the registered voters of the city, the city shall call an election to
determine by majority vote whether to adopt the tax freeze. The Texas Attorney General's office
has determined that "official action" of the city may take the form of either (a) adoption of an
ordinance or resolution by the governing body implementing the tax freeze, or (b) calling for a
binding election on whether to adopt the tax freeze, even in absence of a voter petition. (Opinion
No. GA-0222)
The proposed ordinance would implement the tax freeze directly, without an election.
■ If adopted,the constitution provides that the tax freeze cannot be rescinded by the city council.
The Texas Attorney General has likewise determined that the tax freeze cannot be rescinded by
an election initiated by voter petition (GA-0222).
Homeowners qualify for the freeze for an entire tax year if they turn 65 or become disabled
during that year. The freeze would not apply to taxes based on increased value from
improvements to the property. A tax freeze would expire on January I of a tax year in which the
property is no longer used as a residence homestead of if the property owner did'mot qualify for
the disability or senior exemption
❑ LEGALITY
❑ FISCAL NOTE
❑ CITY MANAGER'S COMMENTS
❑ CITY POLICIES MANUAL
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I CST FO WO , TEXAS
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COUNCIL PROPOSAL
Date:2120107 File Number. Subject:Council Proposal to Direct Staff to Prepare an Ordinance to Implement a Freeze on the Amount
of Property Taxes Imposed on Residential Homesteads Owned by Persons Aged 65 and Over and
260 Persons with Disabilities in accordance with Article VIII,Sec.1-b(h)of the Texas Constitution
Proposed By:Chuck Silcox City Manager's Review: Page:
City Attorney's Review. PAGE 2 OF 3
LEGALITY:
The City Attorney finds that this proposal is legal and within the authority of the City Council.
FISCAL NOTE:
If a tax freeze is implemented for citizens who are disabled and/or sixty-five (65) and over, the
fiscal impact to the City would be the loss of approximately $1,173,831 in property tax revenue
for Fiscal Year 2007-2008. The five-year cumulative impact would be approximately
$18,645,262. The potential impact of the proposed Tax Freeze is described in Informal Report
Number 8827.
CITY MANAGER'S COMMENT:
It is the recommendation of the City Manager that the City Council not implement a freeze on
property taxes for persons aged 65 years and older and persons with disabilities for the following
reasons:
1) The tax freeze would result in significant revenue loss when compared to what
could have otherwise been collected, thereby hindering the Council's ability to:
(a) maintain or improve the level of City Services, or
(b) reduce the property tax rate;
2) The City already grants a generous 65 years and Older Senior homestead
exemption of $40,000.00 and a $40,000 Disability Homestead Exemption, in
addition to a 20% general homestead exemption;
3) The 65 Years and Older Tax Freeze and Disabled Persons Tax Freeze cannot be
"means tested,"meaning wealthy senior citizens and disabled persons will benefit
as well as those of more modest means; and
0 LEGALITY
❑ FISCAL NOTE
❑ CITY MANAGER'S COMMENTS
❑ CITY POLICIES MANUAL
CIT FO WO g TEx,aS
COUNCIL PROPOSAL
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or Pmpe" y Taxes Im3osed on Residential komosbads Owned by Pwwm Aged 65 and Otter and
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260 Persons wit Dis 60es In aceoftme with Arlide VIA,Sm i-Wh)of the Tom Constiation
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4) The 65 Years and 41dcr Tax Freeze wpu d result in inequities with seniors
owning homes of similar valrac. purchased at different times. The same result
would occur under the Disabil:ty Tax Freeze among disabled home owners.
PRO S Y•
Ctmrneilmember Aceuncillnembtr
WIROVED
CITY COUNCIL
MAR — 6 2007
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O LEGALITY
O FISCAL NOTE
O CITY MANAGER'S COMMENTS
0 CITY POLICIES MANUAL "