Many of the same arguments launched against the $10.55 million bond election for the construction of a sewer system for Salado are again being launched via letters to the editor, website postings and social media postings concerning the upcoming Disannexation election.
While many of those arguments are valid and worth consideration, others are misleading. Most recently, former alderman and mayor Danney McCort stated in a March 9 letter to the editor that, “Based on the heavy debt that is being created, citizens over 65 will very likely lose the over 65 exemption.”
The Property Tax Code clarifies: “Sec. 11.13 RESIDENCE HOMESTEAD. (n-1) The governing body of a school district, municipality, or county that adopted an exemption under Subsection (n) for the 2014 tax year may not reduce the amount of or repeal the exemption. This subsection expires December 31, 2019.”
According to recent reports made by the Scottsdale life insurance agency, the Village of Salado has maintained the following exemptions for homesteads, over 65 and disabled homeowners.
For every homeowner that files for their property to be their homestead, the Village of Salado offers an exemption of 20 percent from the taxable value of the homestead with a minimum reduction in the taxable value of $5,000. If you own a home of $200,000, the amount deducted from the taxable value of your home is $40,000, lowering it to $160,000. The total property tax bill for the Village of Salado for this home for 2016 is $867.04.
For those homeowners age 65 or older and for those homeowners who are disabled, the Village of Salado freezes the total property tax at the ceiling of taxes paid in the year that the homeowner files with the Appraisal District for the tax freeze. In addition, the Village of Salado offers an exemption of $50,000 from the taxable value of the home.
That same $200,000 home, for those claiming the age 65 and older or the disabled tax freeze and exemption, is now taxed at a value of $110,000. Now, the total tax bill for that home is lowered to $596.09. Furthermore, regardless of what aldermen adopt for the tax rate in the future, the total tax bill for that home cannot exceed the tax ceiling or freeze of $596.09.
If a future board of aldermen (after Dec. 31, 2019) should reduce or repeal the amount of the over 65 or disabled exemptions, it would not affect any of those over 65 or disabled homeowners whose taxes have already been frozen.
The change in exemption would apply for future assessments of those applying for the over 65 or disabled tax freeze.
This was affirmed by Deputy Chief Appraiser Roger Chesser in 2014. Chesser, in an email with Salado Village Voice on Oct. 24, 2014, was asked this direct question: “A municipality — once it has adopted the over 65 tax ceiling — cannot repeal the tax ceiling. It can repeal or lower the tax exemptions. Are those correct statements? Even if the city were to repeal the exemptions ($50,000 for over 65), it would not affect the ceilings already in place.”
His response was this: “To the best of our knowledge those statements are true.”
The Comptroller’s office, in a lengthy paper on property tax, confirms this, as does the Texas Municipal League (TML) and the Texas Association of Counties. A county, junior college district or municipality, once it has adopted the over 65 Tax Ceiling, may not repeal or rescind it.
The municipal tax freeze and exemptions were put into place in 2003 by a bill by then-State Rep. Fred Brown calling for a constitutional amendment to allow Texas counties, junior colleges and cities to adopt a tax freeze on homesteads of those over age 65 and on homesteads of disabled veterans, it passed the state House unanimously. In 2003, the constitutional amendment was approved by 81 percent of the voters statewide. The amendment freezes the municipal taxes that senior citizens pay, much like the school taxes for seniors have been frozen in Texas for many years.
For many city leaders that were quick to embrace the tax freeze and implement it locally, the idea has backfired as they now face the dilemma of funding their budgets every year.
Many cities have refused to put the tax freezes into place. Others have done so, only to regret it later, especially when they cannot repeal or rescind the tax ceiling.
This is one reason that many Texas counties and cities have chosen not to adopt the tax ceilings. Around the state, cities are dealing with the long-term ramifications of those tax ceilings.
According to the 2016 certified values, the Village of Salado has a certified total freeze adjusted taxable value of $168,130,780.
According to the certified values sent by Chief Appraiser Marvin Hahn, the Village had a total of 1,996 properties and a total Market Value of $289,774,823. The Village loses $121,644,043 in values due to exemptions and tax freezes. Of that decrease in taxable value, $32,055,692 is due to the 20 percent homestead exemption for 719 homeowners. Another $20 million is reduced in taxable values due to the over 65 exemption to 419 homeowners.
The state exemptions account for another $18 million decrease from market value to taxable value.
The tax freeze for over 65 and disabled accounts for another $50,318,767 reduction in assessed value. This reduction in taxable value is because of the numbers of eligible homeowners who froze their taxes when the tax rate for the Village was as low as $0.0492 per $100 valuation.
The Village of Salado is not alone among local municipalities in feeling the economic squeeze of tax freezes coupler
Most municipalities in Bell County have adopted the tax ceiling (often referred to as a tax freeze) for over homeowners over the age of 65.
The Village of Salado did so when it first adopted an ad valorem tax by ordinance in 2008. At that time, village aldermen also adopted the most generous property tax exemptions in Bell County and the lowest property tax in the county at a rate of $0.0492 per $100 valuation.
According to Marvin Hahn, chief appraiser for Bell CAD, Killeen adopted the freeze in 2008, Nolanville in 2005, Temple in 2005 and Troy in 2007. In addition to the tax freeze for over 65, Killeen offers a $20,000 tax exemption, while Temple offers a $10,000 tax exemption for those homesteads. Troy offers the tax freeze only.
The City of Belton offers a $10,000 exemption and tax freeze for over 65 and disabled.
Temple and Salado are the only two municipalities in Bell County to offer a tax exemption for homesteads. Both offer a $5,000 minimum or 20 percent exemption from the taxable value of the homestead. Additionally, the local homestead tax exemptions of 20 percent are stacked with either the over 65 exemption and freeze or the disabled homeowner exemption and freeze.