HomeMy WebLinkAboutIR 8827INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8827
Date: February 20,
�►„'�ss' 2007
> To the Mayor and Members of the City Council
Page 1 of 2
+�r+ SUBJECT: Tax Freeze for Citizens 65 and Older or Disability
This report provides a property tax analysis for those citizens that are residential property owners 65 and
Older and Disability within the City of Fort Worth.
Policy:
The existing Ad Valorem Tax Exemption Policy includes the General Residence Homestead Exemption
(Homestead), a Senior Citizen Homestead Exemption (65 and Older), and a Disability Exemption (Disability).
The Homestead Exemption is 20 percent. Homeowners that are 65 and older or their surviving spouses can
qualify for the 65 and Older Exemption which is $40,000. The Disability Exemption is also valued at
$40,000. Currently, the Ad Valorem Exemption Policy states that homeowners that qualify for the
Homestead Exemption can qualify for the 65 and Older or the Disability Exemption.
There are several factors to consider when weighing the consequences of implementing an additional
exemption to the Ad Valorem Policy:
:ed on the Tarrant Appraisal District 2006 July Certified Tax Role:
• There are approximately 26,600 household accounts that receive the 65 and Older Exemption of
$40,000.
• There are approximately 2,800 household accounts that receive the Disability Exemption.
• The total appraised value for 65 and Older totals $2.8 billion and Disability totals $220 million.
• This equates to $26 million in potential revenue once the tax rate is applied without exemptions or
$12 million in potential revenue when all exemptions are applied.
• The annualized growth rate from 2005 to 2006 indicates the total appraised value of properties 65
and Older increased by 6.6 percent and 5.3 percent for Disability.
• Assuming the same growth experience for 65 and Older and Disability in appraised value, after all
exemptions (Homestead, 65 and Older, and Disability) are applied, should the 65 and Older and
Disability Tax Freeze be implemented, with all other conditions held constant, the first year potential
revenue loss is total $1.17 million. Furthermore, over a five year period, the total potential revenue
loss could increase to $18.6 million.
It is significant to note:
• The current average residential appraised value for a home within the City of Fort Worth is $108,256.
• The current average residential appraised value for 65 and Older is $106,736.
• Using the current average residential appraised value of 65 and Older, applying the Homestead
Exemption and the $40,000 Over 65 Exemption, the average taxable value is $45,388 yielding an
average tax liability of $390.
• The current average residential appraised value for properties eligible for a disability exemption is
$79,596.
• Using the average residential appraised value of Disability households, applying the Homestead
Exemption and $40,000 Disability Exemption, the average taxable value of a property eligible for a
u disability exemption is $23,676 yielding average tax liability of $203.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS
W A IN
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To the Mayor and Members of the City Council
No. 8827
Date: February 20,
2007
Page 2 of 2
SUBJECT: Tax Freeze for Citizens 65 and Older or Disability
Fort Worth is one of the fastest growing cities with varying and increasing needs for increased or expanded
services with limited resources. The implementation of the 65 and Older Tax Freeze and Disability Tax
Freeze is irreversible with immediate negative impacts to the City's ability to maintain service levels within
the first year of implementation. The single year revenue loss from implementing a 65 and Older and
Disability Tax Freeze, with current conditions held constant, totals $1.17 million. The aggregate impact of
implementing these property tax revenue policies detrimentally affects revenue available for city services, is
$18.6 million within 5 years.
Furthermore, manipulating the tax liability of a select group of citizens, for any purpose, increases the tax
burden on other citizens, creating an environment of inequity and decreases the efficiency in the
administration of the tax policy.
Year
Tax
Rate
Total Potential
Revenue With
Homestead and
Over 65 Partial
Exemption
Incremental
Loss
Compared to
Frozen Tax
Year
Aggregate
Loss
2011
0.8600
$17,700,871
$6,380,721
$18,251,820
2010
0.8600
$16,240,735
$4,920,585
2009
0.8600
$14,878,632
$3,558,483
2008
0.8600
$13,608,333
$2,288,184
2007
0.8600
$12,423,998
$1,103,848
2006
0.8600
$11,320,150
Total Potential
Revenue With
Homestead and
Disability Partial
Exemption
Incremental
Loss
Compared to
Frozen Tax
Year
Aggregate
Loss
2011
0.8600
$1,099,305
$87,865
$393,442
2010
0.8600
$1,011,439
$83,035
2009
0.8600
$928,405'''1''
$78,453
2008
0.8600
$849,952
$74,106
2007
0.8600
$775,846
$89,993
2006
0.8600
$705,863
OU , ,:
hartes R. Boswell,
City Manager
ISSUED BY THE CITY MANAGER
FORT WORTH, TEXAS