Revisiting a plan to eliminate city property taxes for elderly residents

 During last night’s city council meeting to finally pass the budget and the tax rate for the upcoming fiscal year, there was talk from council members on ways to reduce the property tax. Back in June 2016, I proposed a plan via this journal to increase the homestead exemption and thus reduce the property tax on homesteads owned by those over the age of 65. Here is a slightly edited version of that original article:

(Truth in advertising. Truth No. 1: I am over the age of 65. Truth No. 2: I do not have a homestead in Kyle.)

I want to make a recommendation for this year’s budget which is to initiate a five-year phase out of property taxes on the homesteads owned by Kyle’s elderly residents. This can not only be accomplished but in a way that will place absolutely no additional tax burdens on others. In fact, it won’t even reduce the amount of property tax the city currently receives. That’s right: Property taxes for those over the age of 65 — many, if not most, of whom are on fixed incomes — can be phased out without reducing the current amount of property taxes the city receives.

The plan is relatively simple. In Year One, the city’s portion of the property tax bill on homesteads owned by elderly residents would be reduced 20 percent; in year two, it would go down 40 percent; 60 percent in year three; 80 percent in year four and finally 100 percent in year five and thereafter.

Here’s why the plan works. According to figures graciously provided me by the city’s expert Finance Director Perwez Moheet (to whom I owe a huge debt of gratitude for getting these numbers for me), if elderly property tax owners were granted a 100 percent exemption this fiscal year, it would cost the city $1,142,000, a mere 1.04 percent of the total budgeted tax revenue. But in Year One, we’re only talking about a 20 percent reduction, which comes to $228,400.

Last month, Moheet told me he expected, based on figures released by the Hayes Central Appraisal District, Kyle’s homeowner valuations would increase 3.13 percent over last year’s. But let’s be really pessimistic here. Let’s say those valuations increase only 2 percent. Moheet told me a 2 percent increase would mean an additional $250,000 in property tax income. That’s still more than the $228,400 lost by beginning the phase out of property taxes for Kyle’s elderly homeowners.

That’s why, not only morally, but monetarily, such a phase out is sensible. It’s doable. And it’s the right thing to do for our elderly citizens.

Now I only hope someone on the City Council has the courage to propose this and make it a part of next year’s budget.

Like I said, that was written and posted on this blog in June 2016 when property values were increasing by only 3.13 percent. This year they increased more than four times that amount, which means the overall impact on the budget would be even less. I am convinced it was a great idea in 2016. I am now convinced it’s even a better idea today.