FERRIS, Texas — The City of Ferris is asking state lawmakers to consider a change in Texas law that would allow cities to eliminate municipal maintenance and operations property taxes on owner-occupied homesteads while continuing to tax commercial and investment properties.
City officials said the proposal would create a new local option allowing city councils, by ordinance, to remove city M&O taxes from properties already qualifying as residence homesteads under state law.
Under the concept advanced by Ferris, commercial property, rental property, second homes, investment properties and institutional or corporate-owned properties would remain fully taxable. Debt service taxes would also remain unchanged.
City leaders say the proposal is aimed at providing targeted tax relief for homeowners while preserving revenue used to fund city services.
“Current law gives cities only limited ways to respond,” City Manager Dr. Brooks Williams said. “A city can use the homestead exemption that already exists, but it is capped at 20% by state law. A city can also lower the tax rate, but that gives the same break to every type of property on the roll. If the goal is to help the homeowner living in the property as a primary residence, that is not a very precise tool.”
Ferris officials say the proposal would go beyond the current local homestead exemption allowed under Texas law by creating an option for cities to fully remove their operating tax burden from qualifying homesteads.
“This proposal would give city councils an optional tool to provide real relief to homeowners without stripping away the revenue that pays for police, fire, streets, drainage, parks, and the other basic services people still expect their city to provide,” Mayor Fred Pontley said.
Williams said the proposal is not intended as a statewide mandate, but as an optional tool cities could choose to adopt.
The city also argues the idea could strengthen neighborhood stability, attract owner-occupants, encourage long-term population growth and improve conditions for retail and commercial investment.
According to city officials, implementing the proposal would likely require changes to the Texas Tax Code and a constitutional amendment under Article VIII of the Texas Constitution, which would likely require voter approval.
Ferris officials say they are asking lawmakers to consider the proposal as part of a broader discussion about property tax relief in Texas.
