Tax freeze issue

At Tuesday’s Greenville City Council meeting, three members said they believed that the proposed freeze on the property tax amount for seniors and the disabled should be left up to the residents in an election rather than decided upon by the council.

This story has been modified from how it appeared in the print edition of the Thursday, Sept. 12 issue of the Herald-Banner. The story below now also includes an example of how a $15,000 homestead exemption for seniors and the disabled could affect owners of higher-valued homes. There is also mention of council members' concerns over a potential "double whammy" if both the $15,000 homestead exemption and the proposed property tax freeze for seniors are approved.

At Tuesday’s Greenville City Council meeting, three members said they believed that the proposed freeze on the property tax amount for seniors and the disabled should be left up to the residents in an election rather than decided upon by the council.

After four weeks of petitioning by residents who support the freeze, councilmen Brent Money, Jerry Ransom and Al Atkins each voiced the opinion that the decision should not be made by the council.

One of the reasons that several council members gave for not being comfortable voting on the proposed freeze was because, if approved, it would be permanent and unrepealable.

“There are certain things that the council should vote on, but for long-term decisions, it should be the citizens,” Ransom said.

The proposed tax freeze that, if approved, would be offered to residents aged 65 or older – or younger people who are disabled – would not be a freeze on the property tax rate or the property’s appraised value. It would, instead, be a freeze on the tax amount.

This means that if a senior citizen were to take advantage of the exemption, and the amount they had to pay in city taxes the year they turned 65 was $300, then they would continue to pay $300 in city taxes year-after-year, regardless of if the tax rate or their property’s value increased.

To be eligible for the exemption, the resident would also have to both own and live in the property for which they are wanting the exemption.

This has made the proposal attractive to many residents who are living on a fixed income such as social security benefits or pensions.

In an effort to suggest a possible alternative to the freeze, Greenville City Manager Summer Spurlock gave a presentation on a homestead exemption that would allow residents 65 and older and the disabled to take $15,000 off of their home’s appraised value before applying the tax rate.

If the $15,000 exemption were to be approved, the change in the amount in taxes owed by a senior resident in Greenville might be as follows:

If a senior owns a home that was appraised at $100,000 in 2018-19, then at the current tax rate of 65.22 cents per $100 valuation, they would have paid about $652.20 that year.

However, if the approved tax rate of 68.22 cents per $100 valuation is approved for 2019-20 and the “assumed property value growth” of 9.78 percent from the city’s proposed budget turns out to be accurate, then the same homeowner, whose home would now be valued at $109,780, could expect to pay $748.70 in local taxes.

Now, if the $15,000 homestead exemption is approved, the same senior homeowner would be eligible for an adjusted taxable value of $94,780 ($109,780 - $15,000) for 2019-20, and would therefore owe $646.59 in city taxes – a small reduction from what they owed in 2018-19.

However, while a senior owner of a $100,000 home could end up paying less in local taxes if the $15,000 homestead exemption is approved, an owner of a higher-valued home might still see an increase in their tax amount, albeit a smaller one.

For example, if a Greenville resident aged 65 or older or a younger person who's disabled owns a home that was appraised at $200,000 in 2018-19, then they would have owed about $1,304.40 in local taxes at that year's tax rate of 65.22 cents per $100 valuation.

If the proposed tax rate of 68.22 cents is approved for 2019-20 and the appraised value of that person's house increases by the projected 9.78 percent, then they would owe about $1,497.84 in local taxes on there home – now valued at $219,560 – without the $15,000 exemption.

With the exemption, the home in this example would have an adjusted taxable value of $204,560 ($219,560 - $15,000), and therefore the local tax amount for the owner would be about $1,395.51 - still an increase compared to what they owed in 2018-19.

While many residents who came to speak at Tuesday’s meeting expressed appreciation for the effort put into the offered alternative exemption, many still preferred the freeze since it’s permanent and provides more relief for people with higher-value homes whose appraised values increased by more than $15,000.

Councilman Money also expressed concern over the potential combined financial impact it could have if the council were to approve the $15,000 homestead exemption and the residents were to also vote in favor of the freeze in an election, resulting in a "double whammy."

Councilman Atkins then requested that City Manager Spurlock prepare a report for the next city council meeting about the potential financial impact of said "double whammy," if both the $15,000 homestead exemption and the freeze on the tax amount for seniors and the disabled were approved.

This week and the next, petition signing sessions will continue for those wishing to show support for the tax freeze for senior residents at Terry Driggers Realty Service, Monday through Friday, 9 a.m. to 5 p.m.

Friday’s issue of the Herald-Banner will include a follow-up story about proposed reductions to the city tax rate and the related possible amendments to the proposed city budget.

Travis Hairgrove is a news reporter and features writer at the Herald-Banner and covers city government for many municipalities in Hunt County. To reach him outside of business hours, email THairgroveReporter@gmail.com.

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