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Council OKs raising tax break for seniors, disabled to $70,000

Friday, March 21, 2014 by Elizabeth Pagano

For the first time in decades, the Austin City Council has raised the property tax exemption for homeowners who are disabled or 65 years or older.


The Council voted 5-2 to raise the property tax exemption from $51,000 to $70,000. Mayor Lee Leffingwell and Council Member Bill Spelman voted in opposition to the change, which was the first update since 1986.


Owners of 31,686 homestead properties currently receive the city’s over-65 exemption, and 2,395 receive its disabled persons exemption. These properties make up a combined $7 billion dollars in total taxable value, which is almost 8 percent of the city’s tax roll.


The increase is expected to amount to more than $3.2 million in lost revenue for the city in Fiscal Year 2015. Those benefiting from the increase will individually save $95.51 that same year.


“There is a cry for property tax relief. And whether that is in the form of exemptions for our seniors and disabled, or a decrease in our property tax rate, we have to take that seriously,” said Mayor Pro Tem Sheryl Cole. “I don’t agree with the premise that $100 is meaningless. My mother is elderly, and I know that can make up a month’s worth of groceries.”


After the vote, East Austin resident Ora Houston told the Austin Monitor, “My family paid property taxes on my homestead since 1954, even though we did not get the same benefits. Over those 60 years we faithfully added our taxes to the ‘pot’ so that people who recently moved to the city could have a neat, cool, green city to live in. Unfortunately, the unintended consequence of growth escalated our property taxes and is forcing many of us out of town. We have put decades of property taxes ‘in the ‘pot’ to help build the infrastructure, parks, libraries and fire stations for all to enjoy. Giving long time property owners who are elderly or disabled a small break on their taxes to help them stay in their homes continues to benefit those who come after us. We will not ‘stop’ paying taxes unless we are forced out of the city.”


The change in policy will cost those not eligible for the exemption. The median-value homeowner will pay about $6.79 more annually. That cost was too great for Leffingwell.


“In light of the fact that it’s an overall property tax increase for people who are not seniors, and in light of the fact that we’re talking about $95 dollars a year… I just don’t think the impact on someone over 65 or someone who is disabled is enough to warrant an overall tax increase,” said Leffingwell.


Spelman agreed, and said that he would like to see a program “more targeted than simply identifying people that are over 65 and own houses.”


“If we were taking money from us, those who earn well over $47,000 a year, that would be fine. That would be a trade that would be equitable,” said Spelman. “The problem is that it’s not just my pocket that we are taking money out of. We are taking money from people who are younger… We’re taking money, particularly, from older folks who are not living in (their own) houses.”


Other local taxing jurisdictions have updated their exemptions for seniors and disabled persons more recently. In 2012, Travis County and Central Health increased their exemption to $70,000. Austin Community College has set their senior tax exemption at $115,000. The Austin Independent School District has local and state combined exemptions that are $35,000 for senior citizens and $25,000 for disabled persons. They also have implemented a state-mandated tax freeze.


In his presentation to City Council, Deputy Chief Financial Officer Ed Van Eenoo also pointed out that the percentage of seniors in Austin is projected to more than double in the next few decades. Currently, senior citizens make up 7.7 percent of the city’s population, but that number is expected to reach 16 percent by 2040.


Council Member Laura Morrison said that even though the savings would only be $100 annually, the move was significant. She pointed out that it would be politically difficult to reverse, unlike another program to help seniors. Morrison also noted that City Council had sought for a mechanism that would ask Council to consider raising the exemption annually,


“Tax breaks, while they might be a small piece of the puzzle for people, do impact a lot of people,” said Morrison. “I think it makes sense for us to take advantage of this tool, and this option that we have.”

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