San Antonio’s 33-Year Tax Streak Is About to End — And Every Texas City Should Be Watching

San Antonio is staring at a $158 million budget deficit over the next two years, with city budget staff warning that the shortfall could grow to $264 million by 2031 if nothing changes.

And the city isn't just weighing its options anymore.

They're actually moving forward on some.

So in mid-June, city manager Eric Walsh put a trial budget in front of council that calls for raising its property tax rate by the maximum amount allowed without a public vote, 3.5%.

But Walsh said that even if they do that, that's not enough.

Even with the tax hike, the draft leans on delaying new police officer hires, raising city fees, shifting fiesta costs on event organizers, and stretching street projects out over multiple years of financing.

And as he put it, their expenses are growing faster than their revenue.

No surprise there, as most major cities in Texas are.

But here's what happened over the long run.

San Antonio is experiencing what analysts are calling an irregular drop in property tax revenue.

It's the first decline since 2011 and when the financial crisis was still unwinding.

So when you look at San Antonio, more homeowners are successfully protesting their appraisals.

And then on top of that, you have more who are claiming homestead exemptions to begin with, not to mention the homestead exemption fraud we've covered many times on this show.

Lower appraised values means less taxable wealth, even at the same rate.

So taxable value on existing San Antonio properties fell about 3.5% this year.

And while it sounds small, when your costs of public safety, road maintenance, utilities, employee salaries continue to go up faster and faster and faster, faster than inflation, even a small revenue drop turns into a structural problem very, very quickly.

The proposed budget comes out in August, and city council is scheduled to vote on September 17th.