San Antonio city leaders will propose raising the tax rate for the first time in 33 years, due in part to a drop in the city\u2019s base taxable values.<\/p>\n
On Wednesday, the City Council received its first major financial briefing since the appraisal district released its preliminary data on 2026 property valuations<\/a>. <\/p>\n Overall, the county\u2019s taxable value went up about 2.5% in 2026, but many individual valuations actually went down from 2025 \u2014 particularly on single-family homes. That data should have come as a relief to many homeowners, whose property tax bills are based on those valuations.<\/p>\n But across the board, taxing entities are now talking about raising rates to keep their revenue on pace with growing expenses. <\/p>\n Texas law allows cities to collect up to 3.5% more revenue from property taxes over the previous year without asking voters\u2019 permission \u2014 not including taxes collected on new development. <\/p>\n In years of high growth municipalities actually had to lower its rate to keep its revenue within that range.<\/p>\n But Erik Walsh said Wednesday that he\u2019s recommending the city start setting its tax rate to meet that 3.5% growth, even if it means raising the rate to keep up.<\/p>\n Doing so would generate<\/a> an extra $25 million in the coming year\u2019s budget, he said, and $42 million in the year after that.<\/p>\n \u201cJust the normal growth we have in our budget for employees or labor expenses \u2026 all those dollar amounts are more than $25 million,\u201d Walsh said. \u201cThe 3.5% as laid out in state law, is for cities and counties to sustain municipal operations. So that\u2019s how I view it.\u201d<\/p>\n The exact rate increase won\u2019t be known until the appraisal district finalizes its numbers later this summer, and council approves the decision.<\/p>\n Budget cuts to come<\/p>\n Across the county, school districts and municipalities are largely feeling the same stress when it comes to property values. <\/p>\n Last week, Bexar County leaders had a similar budget forecasting meeting<\/a>, in which County Manager David Smith said they\u2019re in for \u201cthe worst year for property tax revenue that we\u2019ve seen\u201d since the 2008 financial crisis.<\/p>\n By comparison, San Antonio has a more diverse revenue stream that\u2019s helping even things out.<\/p>\n Roughly a third of San Antonio\u2019s general fund \u2014 projected at about $1.7 billion for fiscal year 2026-27 \u2014 comes from property taxes.<\/p>\n A third comes from CPS Energy, which has been selling lots of energy onto the grid for a profit, Walsh said, and a quarter comes from sales tax, which is on a better growth trajectory. Another 15% comes from other sources.<\/p>\n But Budget Director Freddy Martinez said the city still needs to trim $70 million out of its next two years\u2019 budgets to remain structurally sound \u2014 even if it raises property taxes to the highest the state allows. <\/p>\n That\u2019s because the cost of big-ticket items like police and fire, staff salaries and employee healthcare, as well as technology and equipment rise annually<\/a> at a rate that exceeds projected revenue growth.<\/p>\n \u2018Still a high-growth city\u2019<\/p>\n Overall, the county\u2019s taxable value went up about 2.5% in 2026.<\/p>\n But when San Antonio properties are separated out from the broader countywide data, the taxable value on existing properties was down by about 3.54%. <\/p>\n