Page 62 - HurstFY23AnnualBudget

APPROVED BUDGET FISCAL YEAR 2022-2023

Tax exemptions impact revenues generated from property taxes and debt service payments. The
City grants a 20% homestead exemption, $35,000 senior citizen exemption, $35,000 disabled
citizen exemption, and up to a $12,000 disabled veteran exemption. The City has for many years
granted the maximum homestead exemption, which began at 40% and decreased by law to 20%.
The senior citizen exemption and disabled citizen exemption increased from $30,000 to $33,000
for fiscal year 1995-1996. The exemptions were increased again from $33,000 to $35,000 in fiscal
year 2000-2001. These exemption changes are a direct result of the Anti-Crime Half Cent Sales
Tax implementation in 1995 which was renewed in May 2010 by the voters for an additional
twenty years.

In addition to the exemptions offered by the City, senior and disabled residents will again benefit
from an adopted “tax limitation” this year. In September 2003, Texas voters approved a
constitutional amendment that authorized a local option tax limitation on residential
homesteads of persons disabled or 65 years of age or older (seniors). The City of Hurst exercised
its local option by adopting the tax limitation on February 10, 2004. The tax limitation works by
ensuring that a senior or disabled homeowner will not have a municipal tax bill any higher than
the amount owed in the year in which he/she became eligible for the limitation (by turning 65 or
becoming disabled). Those who were 65 or disabled when the tax limitation was adopted
automatically became eligible to receive the tax benefit. However, the law states that the
limitation does not provide retroactive benefits. The City will continue to see a compounding
impact in future revenue due to this relatively new law. The senior and disabled tax limitation
will provide $1,600,000 of tax relief to eligible taxpayers in 2022-2023.

Sales Tax

Sales tax revenue projections shall be conservative due to the volatile nature of this economically
sensitive revenue source. The 2022-2023 sales tax projections, including the sales tax reserve,
have been adjusted to account for recent trends and other indicators related to sales tax. These
indicators include changes to state law and concerns over the national, state, and regional
economy. During FY 2019, the City saw a 2% decrease in annual sales tax revenue which led to
concerns about sales tax revenue in FY 2020 on top of economic concerns related to the COVID-
19 pandemic. At the close of FY 2020 the City experienced another decline in annual sales tax
revenue of about 3%. Fortunately, this trend reversed in FY 2021 and FY 2022 with increases of
approximately 8% and 11% respectively. While the increases are encouraging, they are likely the
result of federal stimulus programs and inflation. Much of the increased revenue is necessary to
support increased expenditures related to inflation. The City maintained its conservative
approach to budgeting sales tax and maintained a General Fund contingency of about 10% of
projected sales tax revenue. This approach has been an important strategy to help mitigate the
impact of changes in the economy. The City also fulfilled its sale tax sharing obligations
associated with the redevelopment of North East Mall. Under this agreement, the developer
received a rebate for a portion of sales taxes earned above the base line sales tax revenue prior
to the expansion of North East Mall and the construction of the Shops at North East Mall. The

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