HomeMy WebLinkAboutIR 8694INFQR.P4AL REPORT TO CITY COUNCIL MEMBERS No. 8694
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To the Mayor and Members of the City Council June 28, 2005
Page I of 4
1fJSr SUBJECT: AD VALOREM TAX EXEMPTION POLICIES AND PRACTICES
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Recently the City Council requested information • tax revenues and the impact of property tax
exemptions on taxable value. The Council also requested information on the impact on revenue
• a property tax freeze for homeowners over the age of 65. This report provides information on
tax exemption policies and the amount of unrealized revenue resulting from the currently
authorized exemptions. In addition, this report provides estimates of lost revenue if the property
tax freeze for homeowners over the age of 65 were enacted. The City of Fort Worth and the State
of Texas allow approximately 19.6 percent of the total assessed value of property in Fort Worth to
be fully • partially exempted from the property tax. Exemptions fall into a number of categories,
some • which are controlled by the City Council. Those exemptions currently being claimed •
Fort Worth property owners over which the City Council exercises no discretionary power are:
Agricultural, Freeport, Foreign Trade Zone, Disabled Veterans, Scenic Land, Solar and Wind
Powered Energy Devices, Pollution Control Devices, Prorated Absolutes and Nominal Value
Personal Property.
A. The City Council may increase or decrease the following exemptions-
General Residence Homestead Exemption: An exemption • not less than $5,0k!4'
and not to exceed 20 percent of the appraised value. The current value is 20 percent.
2. Senior Citizen Homestead Exemption: This is in addition to the General Residen
Homestead Exemption for owners who are 65 and older, • their surviving spouse
The current value is $40,000 �1
3. Disabled Homestead Exemption- This exempts $40,000 of homestead value for
property owners who are 100 percent disabled and unable to work due to their
disability, as determined by the social security administration standards and confirmed
by a physician.
ISSUED BY THE CITYMANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS
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To the Mayor and Members of the City Council
June 28, 2005
Page 2 of 4
SUBJECT: AD VALOREM TAX EXEMPTION POLICIES AND PRACTICES
B. Calculation of Current Property Tax Revenue From Total Appraised Value:
The amount of Current Property Tax Revenue that the City expects to collect in FY2004 -05, after
exemptions, is $224 million. This amount is listed in the last line of the following table. The total
value of property exempted from property taxes is $ 6.1 billion (shaded line). This equates to
approximately $42 million in unrealized revenues in the current fiscal year due to exemptions.
Net Taxable Value
• Minimum Value of
Protested Values
• Incomplete Values
Adjusted Net Value
Total Levy
Tax Rate per $100 of Value
Est. Levy Adjustments
Collection of Levy
% Collection
Less Est. Refunds
Budgeted Revenues
$23,691,814 $24,964,737 $1,272,923 5.4%
$782,465
FY03 -04
FY04 -05
Change From
Percent
$1,285,950
Certified
Certified
FY03 -04
Change
Total Appraised Value ($000)
$28,967,991
$31,069,287
$2,101,296
7.3%
Less:
$0.86500
$0.86500
Deferred Special Use Value Loss
- 0.333%
$208,724
Agricultural
$495,875
$416,213
- $79,662
- 161%
Scenic Land
$5,867
$5,959
$92
1.6%
Partial Exemption Value Loss
$206,183
$224,080
$17,881
8.7%
Disabled Veteran
$31,119
$32,682
$1,563
5.0%
Over -65
$850,285
$883,075
$32,790
3.9%
Homestead
$2,090,667
$2,360,654
$269,987
12.9%
Disabled Person
$67,333
$84,609
$17,276
25.7%
Freeport Inventory
$1,462,494
$1,965,715
$503,221
34.4%
Solar/Wind
$14
$14
$0
0.0%
Pollution Control
$5,288
$7,189
$1,901
36.0%
Foreign Trade Zone
$29,810
$38,685
$8,875
29.8%
Historic Site
$21,107
$28,713
$7,606
36.0%
Prorated Absolute
$1,837
$6,578
$4,741
258.1%
Commercial Housing Develop!
$0
$0
$0
Abatement Value Loss
$214,480
$274,446
$59,966
28.0%
Nominal Personal Property
$1
$18
$17
1688.2%
Net Taxable Value
• Minimum Value of
Protested Values
• Incomplete Values
Adjusted Net Value
Total Levy
Tax Rate per $100 of Value
Est. Levy Adjustments
Collection of Levy
% Collection
Less Est. Refunds
Budgeted Revenues
$23,691,814 $24,964,737 $1,272,923 5.4%
$782,465
$864,864
$82,399
10.5%
$863,798
$1,285,950
$25,338,077
$27,115,551
$1,777,474
7.0.10
$219,174
$234,550
$15,375
7.0%
$0.86500
$0.86500
- 0.800%
- 0.333%
$208,724
$226,757
$18,032
8.6%
96.00%
97.00%
- $2,525
- $2,677
$206,183
$224,080
$17,881
8.7%
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMfAL REPORT TO CITY COUNCIL MEMBERS No. 8694
To the Mayor and Members of the City Council June 28, 2005
Page 3 of 4
SUBJECT: AD VALOREM TAX EXEMPTION POLICIES AND PRACTICES
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Based on the $6.1 billion value of exemptions, for comparison purposes, the following tabl-t
shows the approximate revenue loss due to each type of exemption for FY 04 and FY 05 based
on the current $0.865 tax rate.
Deferred Special Use Value Loss
Agricultural
Scenic Land
Partial Exemption Value Loss
Disabled Veteran
Over-65
Homestead
Disabled Person
Freeport Inventory
Solar/vvind
Pollution Control
Foreign Trade Zone
Historic Site
Prorated Absolute
Abatement Value Loss
Nominal Personal Property
Totals
FY03-04
FY04-05
Change From
Percent
Certified
Certified
FY03-04
Change
$14,881,728
$3,529,702
$2,880,194
($649,508)
-18.40%
$41,762
$41,907
$145
0.35%
$221,510
$226,159
$4,649
2.10%
$6,052,475
$6,110,879
$58,404
0.96%
$14,881,728
$16,335,726
$1,453,998
9.77%
$479,288
$585,494
$106,206
22,16%
$10,410,285
$13,602,748
$3,192,463
30.67%
$100
$100
$0
0.00%
$37,641
$49,748
$12,107
32,16%
$212,193
$267,700
$55,507
26.16%
$150,243
$198,694
$48,451
32.25%
$13,076
$56,900
$43,824
335,15%
$1,526,706
$1,899,166
$372,460
24,40%
$7
$124
$117
n/a
$37,556,716 $42,255,539 $4,698,823 12.51%
Ill. Property Tax Freeze for Homeowners Over 65
ISSUED BY THE Cr Y MANAGER FORT WORTH, TEX-AS
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A. Impact of Freeze on Appraised Values: The subject of a property tax freeze for citizens
who are 65 years of age or older recently resurfaced. The 2005 Tarrant Appraisal Districi
JAD — May data) shows that homeowners, age 65 and older (who were eligible for the
$40,000, Over-65 Exemption) own property worth a net taxable property value of $2.618
billion. After application of the exemption for qualified, over-65 homeowners, that $2.618
billion translates into revenues • approximately $9.6 million to the City.
B. Impact of Property Tax Freeze on Tax Revenue: Property tax revenue due to valuation
increases grew by an estimated 5.9% this year. If it can be assumed that the 5.9% growth
can be applied to this category of homeowners and the tax freeze is implemented, then the
City will fail to realize $566,850 in FY06-07. These losses increase in size each year as
the market value of the homes continue to rise while the City revenue does not. Over four
years, the estimated loss from this policy would be approximately $6 million. The following
table shows the details of the estimated losses. Additionally, it should be considered that
the over-65 population is increasing as a percent of the total population. Although figures
for the growth of that specific segment of the population are not currently available, it
should be considered that the revenue losses are likely to be understated.
FY05-06 FY06-07 M7-C8 FYD&-09 FY09-10 4year
FbvE" TOW
WaW ft teew $9,607,622 $10,174,472 $10,774,766 $11,410,477 $I2,083,695
LOSS the to freeze $555,850 $1,167,144 $1,802855 $2,476.073 $6.012,921
This Informal Report is being provided for information purposes. Should you have any questions,
please contact Richard Zavala, Acting Assistant City Manager. or Bridgette Garrett, Budget and
Management Services Director.
Charles R. Boswell
City Manager
ISSUED BY THE CITY MANAGER FORT WORT H, TEXAS