AUSTIN (KXAN) — As the budget process moves along, the City of Austin is doing the math to figure out what it would cost to offer a homestead exemption.
An exemption removes part of the value of your property from taxation and lowers your tax bill. Under the exemption, if your home is valued at $200,000, you would only have to pay property taxes on $160,000.
Offering a 20 percent tax break to Austin homeowners would cost the city $35.5 million.
“You clearly have to tell citizens how you’re going to pay for that,” said councilman Mike Martinez who is also running for mayor. “I dare say you’d be hard pressed to find $36 million in that budget.”
Steve Adler was at city hall Monday campaigning on the issue minutes after officially filing to run for mayor.
“It’s long overdue,” said Adler. “Travis County did it years ago.”
The Austin lawyer said there are two ways to make it happen.
“One way is to find the money in the budget which is the first place the mayor or city council should ever look for these kinds of things,” he said. “And the second way to do it is to make adjustments in the tax rate to ensure that this is revenue neutral.”
His opponent has more questions.
“Which city services are you gonna cut?” Martinez asked. “Which fire stations are we closing? Or how much are you going to raise our taxes to cover that $36 million?”
Both agree it would be better to offer a flat rate homestead exemption so the savings are equal across the board no matter how much your home is worth. That option is not currently allowed under state law.
Right now, the City of Austin offers flat rate homestead exemptions to senior citizens and disabled homeowners. The city exempts a flat $71,000 of their property value.
A bill filed by State Rep. Eddie Rodriguez, D-Austin, that failed last session aimed to give cities the option of offering flat-rate exemptions to reduce the tax burden on middle and lower income homeowners. Under a percentage system owners of high-dollar homes get a bigger break.