Pearland City Council pauses on increasing homestead exemption
Published: Wed, 06/07/23
Pearland City Council pauses on increasing homestead exemption
City Council declined to move forward with increasing Pearland's homestead exemption but said it could revisit the rate in the fall.
(Community Impact staff)
Community Impact
By Rachel Leland
Updated
Pearland City Council did not reach a consensus on whether to move forward with a potential homestead increase for Pearland residents at a June 5 workshop.
Two-minute impact
The workshop aimed to understand the potential impact of raising the homestead exemption from 2.5% to 20% on residents, businesses and the city's budget.
To understand the impact of raising the homestead exemption, city officials presented a table showing the tax implications for residents, small and large businesses, hotels, and restaurants at the current homestead exemption rate of 2.5% and at 5%, 10%, 15% and 20%.
Long story short
According to the city’s presentation, because residents would be required to pay less in taxes, the tax rate would need to be increased, thus making businesses, that are not eligible for the exemption pay more.
Officials estimated the city has about 30,000 taxable homesteads in the city.
According to the presentation, with a 20% homestead exemption, on average, homeowners would save approximately $38 annually, whereas businesses could experience annual impacts ranging from $197-$65,300.
Quotes of note
“If you went to 20%, it has a significant impact on the budget, and you would need to adjust your tax rate accordingly, [and] then it would shift burden to the businesses,” Mayor Kevin Cole said. “So the real question is, How do you this, when do you do it, and what’s the long-term implications to do it?”
Cole also added he hoped any change made would have the backing of the majority of City Council.
“I don’t see us moving to 20% in one year, but if you’re moving to 20%, we need to [be] very intentional in how we do it. We need to have a process in place that’s council-backed,” Cole said.
Pearland Chamber of Commerce officials also attended the workshop.
“The Pearland Chamber of Commerce acknowledges and appreciates the City Council's decision to hold the workshop, as it demonstrates their commitment to understanding the potential implications for local businesses,” Pearland Chamber of Commerce President Jim Johnson told Community Impact.
Going forward
While City Council chose not to change the homestead exemption rate, City Manager Trent Epperson said city officials and council could revisit changing the percentage after the current budget cycle ends in September.