COPPERAS COVE — City Council members Tuesday opposed the creation of a bill in the Texas House of Representatives that would — if passed by the state Legislature — exempt 100 percent disabled veterans from paying sales taxes.
The vote was 6-0, with Councilman Danny Palmer abstaining.
“There is a lot of potential for fraud,” Councilman Jim Schmitz said. “It was really poorly thought out.”
Schmitz, along with five other members of the council, agreed to send a letter to state Rep. J.D. Sheffield, R-Gatesville, asking him to either oppose the bill or request the city be exempt from its implementation. Schmitz asked city staff to send the letter to other representatives as well.
The council didn’t oppose the intent of the bill, but rather the effects that it would have on military communities such as Copperas Cove.
“The impact is on the communities that have those (100 percent disabled veterans) citizens,” Councilman Gary Kent said. “The communities that don’t have these groups, it doesn’t affect them.”
Ryan Haverlah, the city’s budget director, said the proposed bill could reduce the city’s sales tax revenue by about $100,000 annually. The figure, however, is “conservative,” he said.
The estimated impact was figured using information from the U.S. Census Bureau, the Heart of Texas Defense Alliance, and the current number of people claiming the 100 percent disabled veterans homestead property tax exemption, which allows those veterans and their surviving spouse not to pay any property taxes.
Since not all 100 percent disabled veterans own homes, the sales tax estimate could be larger, Haverlah said.
While the city is smaller than some military communities, such as Killeen, it still has the highest number of people claiming the property tax exemption per capita, Haverlah said. It has resulted in a decrease in revenue of about $370,000, which is 2.54 percent of Copperas Cove’s budget.
The reduction to the budget has already resulted in the city leaving several positions unfunded as they become vacant, City Manager Andrea Gardner said.
“We will either have to raise additional revenue (raise property taxes) or decrease expenditures,” Haverlah said, about ways to compensate for the possible losses from the proposed House bill.
The council also asked Gardner if the city would be watching the bill further and requested to have people speak at state public hearings if the bill comes out of committee.
The bill awaiting review by the House Way and Means committee.