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Homestead exemption cuts revenue in Cove

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Posted: Sunday, May 27, 2012 12:00 pm

By Mason W. Canales

Killeen Daily Herald

COPPERAS COVE - A complete homestead tax exemption for 100 percent disabled veterans has city officials searching for ways to recoup the budget losses.

"There is a lot of confusion surrounding this issue," said City Manager Andrea Gardner, who recently talked with the Texas Municipal League's Executive Committee about the exemption and the budget problems it has created for the city.

"Our intent is not to remove the exemptions. We are not saying that we do not think (disabled veterans) deserve this," said Gardner. "But the communities surrounding military installations are bearing the burden of this exemption."

During the 2011-12 fiscal year, 419 residents in Cove claimed the homestead exemption and removed an estimated $42 million in assessed property values, or about $320,000 in possible revenue, according to a city-performed survey.

Copperas Cove has lost 2.27 percent of its general fund revenue because of this exemption, said Gardner.

Cove's survey stated that Killeen had 1,149 residents claim the exemption in the same fiscal year for $124.5 million of exempted assessed property values or $925,000 of projected revenue loss.

In Harker Heights, the survey reported that 260 residents claimed the exemption for a loss of about $42 million of assessed property value or about $285,00 of projected revenue.

"We welcome our veterans, and we want them to reside in our communities, but we have to realize that the impact is only going to grow as we attract more and more veterans to the state of Texas," said Gardner. "We monitor and do things that we thought would attract them or entice them to stay in the Central Texas community because they are excellent residents."

Across three counties

Since the passage of the disabled veteran exemption three years ago, the number of residents claiming it is growing, according to Bell, Coryell and Lampasas tax district officials.

In Bell County, there are more than 2,000 fully exempt homes, said Marvin Hahn, chief appraiser for the Bell County Tax Appraisal District.

Another state law allows veterans with a certain percentage of disability to receive deductions between $5,000 and $12,000 on the appraised value of any property they own. Hahn said there are between 12,000 and 13,000 of those smaller exemptions in Bell County.

In Coryell County, there were about 522 people claiming the homestead exemption in 2009, said Mitch Fast, chief appraiser for the Central Coryell County Tax Appraisal District.

But by 2012, and since the state added surviving military spouses of disabled veterans to the exemption, there were 617 people claiming the exemption.

In Lampasas County, the exemption is expected to apply to 224 homeowners this year, said Melissa Gonzales, chief appraiser for the county's district.

Handling the cuts

Harker Heights stands to lose 1.69 percent of possible property tax revenue for the 2011-12 fiscal year, said Alberta Barrett, finance director for Harker Heights.

"It has not posed any real problems or issues for us," said Barrett. "The other growth that we had in the city has definitely offset any loss that we had from that exemption."

But Gardner said Copperas Cove has not been as fortunate. Harker Heights has significant commercial growth with Market Heights and other businesses along Farm-to-Market 2410 and Central Texas Expressway.

Although the Shops at Five Hills in Copperas Cove is expected to be a larger commercial development than Market Heights, Gardner said she went to the municipal league to discuss possible ideas for sharing the financial burden of the homestead exemption across several communities. For example, a possible pool of an increased sales tax could be created or a special fund for cities with high disabled veteran population rates.

"I don't know what the answer is, and I don't know how they would get reimbursed or refunded," said Pampa Mayor Brad Pingel, chairman of the municipal league's executive board. "I'm sure another community wouldn't want to give up their funding to help them get refunded.

"The problem with our board, the TML board that I chaired, (was) our job was trying to take an entire state into account when you take a situation like it that affects a small area, like this one may affect the Killeen area and the El Paso area."

Despite Pingel's concerns, Gardner said the committee was very responsive and favorable of Copperas Cove seeking a solution to property tax revenue lost by the homestead exemption.

Contact Mason W. Canales at mcanales@kdhnews.com or (254) 501-7474. Follow him on Twitter at KDHCoveEditor.

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