Second thoughts after township refused homestead exemption

Gordy Bunch, chairman of The Woodlands Township Board of Directors, requested the township staff to provide scenarios that would phase in a homestead exemption beginning in 2019. Gordy Bunch, chairman of The Woodlands Township Board of Directors, requested the township staff to provide scenarios that would phase in a homestead exemption beginning in 2019. Photo: Jason Fochtman, Staff Photographer Photo: Jason Fochtman, Staff Photographer Image 1 of / 1 Caption Close Second thoughts after township refused homestead exemption 1 / 1 Back to Gallery

After The Woodlands Township board refused to implement a 20 percent homestead exemption in April for property owners, Chairman Gordy Bunch asked township staff to prepare a budget initiative phasing in the exemption beginning in 2019.

Bunch made the request during the board's May 18 workshop meeting regarding preliminary budget discussions.

Monique Sharp, assistant general manager for finance and administration, noted that while the board was less than lukewarm on the exemption, it is too late to implement it for 2018.

The board will begin budget hearings Aug. 14.

In April, board member Bruce Rieser said adopting the exemption may be the right thing "politically" but wasn't a financially sound decision for the community.

"I'm comfortable where we are at," Rieser said of the township's financial health. "Frankly, I think the township has done an outstanding job of doing exactly what we are supposed to do as fiscal conservatives, and that is spend as little of taxpayers' money as possible.

"Granting a 20 percent exemption would be the easiest thing to do, but I think it would be really irresponsible as a township."

According to information from the township, the board's effort to continue lowering taxes is more effective than a 20 percent homestead exemption. Sharp noted significant tax relief has been provided to taxpayers in the form of lower rates, resulting in $53.7 million less taxes paid since 2012 than if the rate had not been lowered. The tax rate has been lowered by 29.2 percent over the past five years, from 32.5 cents to 23 cents per $100 valuation.

According to Sharp's data, a 5 percent exemption would result in a $1.8 million revenue loss, a 10 percent exemption would be a $3.6 million loss, a 15 percent would be a $5.4 million loss and a 20 percent would be a $7.2 million loss in property tax revenue.

To offset those losses, Sharp pointed out, the board would have to decrease operating or capital expenditures, decrease its allocations to reserves or increase projections for sales and use tax revenue.

The board considered the homestead exemption after several community members urged them to do so during public comment after Montgomery County commissioners adopted a 20 percent exemption for 2018.

Commissioners initially adopted a 10 percent homestead exemption during a February meeting, but Precinct 3 Commissioner James Noack brought the item back in March for additional discussion. County Judge Craig Doyal was left stunned when Precinct 2 Commissioner Charlie Riley shifted voting sides and agreed to increase the previously adopted homestead exemption from 10 percent to 20 percent.

The court approved the 20 percent exemption in a 4-1 vote. Precinct 1 Commissioner Mike Meador was the lone nay vote.

Doyal supported an exemption but wanted to phase it in over the next few budget years.

According to a March 28 presentation by Tax Assessor-Collector Tammy McRae, a 10 percent exemption would reduce the county's property tax revenue by about $14 million and a 15 percent exemption would reduce it by $20.9 million. A 20 percent homestead exemption will result in a $28 million loss in property tax revenue for the county.

However, she said, more than $18 million of that would be offset by new growth in the property tax base.

The Montgomery County Hospital District also adopted a 20 percent homestead exemption in April for the upcoming budget year.