City of Ferris calls for new local option to remove city operating taxes from primary homes
Ferris, Texas — The City of Ferris is asking state leaders to consider a new local option in Texas law that would allow a city to remove its maintenance and operations property tax from homes that already qualify as a residence homestead under state law.
Under the concept the City of Ferris has advanced, a city council could act by ordinance to provide full M&O tax relief to properties that already qualify as primary residence homesteads under state law. Commercial property, rental property, investment property, second homes, and institutional or corporate ownership would remain fully taxable and continue paying their normal share. Debt service taxes would stay untouched and continue under current law.
City officials say the idea is rooted in a simple point…When Texans voice concern that they never really own the home they live in, they are talking about the place they call home each day. They are not talking about a strip center, a corporate rental portfolio, or an investor-held house.
“Current law gives cities only limited ways to respond,” said Dr. Brooks Williams, City Manager of the City of Ferris. “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.”
“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,” said Ferris Mayor Fred Pontley.
“Texas already knows how to identify a qualified residence homestead,” Williams said. “The appraisal process already separates the primary home someone lives in from commercial property, rental property, investment property, and second homes. Current law under Tex. Tax Code § 11.13(n) lets cities offer only a capped local-option exemption. If a city wants to go further, the practical answer today is to lower the overall rate, and that gives the same break to every class of property on the roll. We are asking for something more precise than that. We are asking for the authority to remove the City’s M&O tax from qualified homesteads only, while keeping non-homestead property fully in the base.”
Williams said the city is not asking the Legislature to force the model on every community.
The City of Ferris also sees a broader economic benefit in the idea. City leaders believe that removing city operating taxes from qualified homesteads could make communities more attractive to owner-occupants, support neighborhood stability, strengthen long-term population growth, and improve the case for new retail and service investment. More full-time residents often mean more local spending, more household stability, and a stronger market case for commercial growth.
The City of Ferris does not believe businesses, landlords, institutional owners, investors, and second-home owners should automatically receive the same local tax relief that is intended for owner-occupied primary residences. City officials say the state already distinguishes residence homesteads through the appraisal process, and local governments should have the option to build on that distinction in a more practical way.
City officials said moving from the current 20% city homestead cap to a full municipal M&O homestead option would likely require both statutory changes to the Texas Tax Code and a constitutional amendment under Article VIII of the Texas Constitution. Previous bills have followed that same path by tying the change to voter approval of the required constitutional amendment.
