Lakeway City Council voted 4‑3 on September 21 to adopt the fiscal year 2026‑27 budget and a modest property‑tax increase. The decision keeps essential city services running while addressing a projected $581,000 gap.
Budget shortfall and tax options
City staff warned in June that revenues would fall nearly 5.5% and expenditures would rise 6%, creating a $1.6 million shortfall. A major factor was a more than 50% drop in building and development revenue.
To close the gap, staff recommended the “de minimis” tax rate, which would generate about $500,000 more in revenue without triggering a voter‑approval requirement. Council members Mayor Thomas Kilgore and Wes Hook opposed that option, arguing it would burden residents.
Instead, the council adopted the no‑new‑revenue maintenance‑and‑operations (M&O) rate of $0.1701 per $100 of valuation, a slight rise from $0.1696 the prior year. The average homeowner can expect an additional $10 on their annual property‑tax bill.
Balancing the budget
Even with the modest tax increase, the budget still shows a $581,000 shortfall. Under the de minimis rate, that deficit would have been roughly $201,000, according to City Manager Joseph Molis.
Council members discussed using reserve funds, cutting services, or reducing staff to cover the gap. Council Member Logan Brown expressed concern about dipping into savings and suggested layoffs might become necessary.
Police Chief Glen Koen, speaking for city staff, emphasized that no one supports layoffs. He praised the hard work of department heads and staff, and urged patience while the finance team finalizes a sustainable plan.
Final approval and next steps
The council ultimately approved the budget, directing the $581,000 shortfall to be covered by existing reserves. No layoffs or additional service cuts were approved.
General‑fund expenditures total nearly $20.9 million, covering day‑to‑day operations such as payroll, police, and community services. The parks bond fund, at $13 million, funds capital projects for parks and recreation.
The new budget and tax rate take effect on October 1. Nearby Lake Travis ISD adopted a slightly lower school‑district rate of $1.0329 per $100 of valuation, while Travis County homeowners may see a modest increase once the county finalizes its own budget.
What this means for residents
Lakeway homeowners will see a small rise in their property‑tax bills, but the city has avoided more drastic measures like staff reductions. By using reserve funds and keeping the tax increase modest, the council aims to preserve the quality of services that families rely on, from public safety to park amenities.
Original reporting: Community Impact — Austin — read the source article.
