The city of Waco’s budget staff is recommending new property tax exemptions that would shave hundreds of dollars from many homeowners’ bills, but the city council will have to work quickly to implement the change in time for this year.
During a city council meeting Tuesday, Budget Director Nicholas Sarpy recommended increasing the city’s homestead exemption, which reduces the taxable value of an owner’s primary residence compared to its appraised value, from 10% of the appraised value to 15%. Sarpy also recommended raising exemptions for homeowners age 65 or older to $50,000 compared to the current $5,000, and establishing a $50,000 exemption for disabled homeowners.
School districts automatically apply a $10,000 homestead exemption for homeowners who are 65 and older or disabled. Other taxing entities, including cities, an enact exemptions by ordinance.
Instead of two readings and votes spread over two council meetings, the typical process for new Waco ordinances, the Waco City Council plans to read the ordinance twice during its June 21 meeting and pass it to conform to the timeline. The city will receive certified tax rolls June 25.
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Sarpy said state law requires the council to pass the exemptions before July 1.
I think this hopefully sends a message to our community that we’re trying to balance as a reference, the rising cost in our community and the rising home values in our community, with the rising cost the city bears and the desire for us to continue to be able to deliver excellent customer service,” Waco Mayor Dillon Meek said.
The city council typically sets the city’s property tax rate sometime in August.
Sarpy estimated the proposed exemptions would cost the city about $4.9 million from 2023 to 2028. For a Waco home with an average taxable value of about $195,580, the homestead exemption would save about $75 in taxes per year. Homeowners 65 and older would save $420 per year, and disabled homeowners would save $459 per year.
Assistant City Manager Paul Cain said tax relief measures have to be balanced against the increasing cost of providing city services and paying employees competitive wages.
“We know that certain chemicals we buy for water treatment, and asphalt we buy for street construction, that inflation rate is 30% to 60%, so we’re dealing with those things in the budget process,” Cain said.
Council Member Josh Borderud said he supports of the expanded exemptions.
“The relief from exemptions can be much more significant than a rate reduction could necessarily be, and it also allows the city to perform its necessary services and continue to accommodate a growing city with inflation continuing to rise and labor continuing to be in short supply,” Borderud said.
Council Member Kelly Palmer said she supports the measure as well, especially the exemptions for disabled people and senior citizens.
“This feels like it fits really neatly into the work we’ve done along equity lines, prioritizing residents with disabilities and prioritizing our senior citizens,” Palmer said.
Council Member Alice Rodriguez said that as one of those senior citizens, she is thankful for the proposal.
Council Member Jim Holmes said late last year he began getting calls from constituents worried about rising property values, especially retirees more likely to be on fixed income.
