At the regular City Council meeting on Sept. 18, 2023, City Council voted (6-1) to approve a 2023 tax rate of .1440 per $100 property valuation, and voted to approve (6-1) the FY 2024 budget. The previous tax rate was .1290. The average home value in Lakeway is now $779,247, so the 2023 approved tax rate of .1440 would mean an average Lakeway property tax annual bill of $1,122, which is an increase of about $211 on an average property tax bill compared to the previous year.
The FY 2024 budget takes effect Oct. 1, 2023 and includes seven new positions, a three-percent merit increase for staff and implements recommendations from a salary survey for staff, among other items. As an overview, the City of Lakeway takes up just about 6.4% of your entire property tax bill, which for the previous year was an average of $911 per property (down from $938 the year before). That portion helps provide funding to help create and maintain our local parks and trails, ensure repairs and maintenance of our local roadways and infrastructure, helps create a variety of free community events and activities, and funds our police department, which continues to make Lakeway one of the safest cities in the state.
WHY CHANGE THE TAX RATE?
As a city grows, it can afford to consistently lower its tax rate because its new growth provides additional revenue that can be used to improve programs and staff, as well as keep up with inflation. Simultaneously, as appraised property values increase, city government will reduce the tax rate to a value that will not generate significantly more income than deemed necessary; called the No New Revenue tax rate. The idea is that as a city gains taxable income through new growth and increased appraisal values, it can lower the tax burden on individual properties because that burden is spread among more properties each year. However, as that new growth begins to slow, flatten or even decrease, there is a risk that inflation will outpace that new growth, and a city will need to preserve or increase revenues to maintain the quality of services it provides to its citizens. While not fully developed, Lakeway has started to reach its peak in development potential, with new growth remaining steady and then potentially declining in the next few years.
Additionally, the February ice storm cost the City of Lakeway over $1.5+ million in clean-up costs for our area properties, which was not anticipated in our current budget, which annually runs around $19 million. If you were to spread that $1.5+ million cost from February 2023's ice storm across Lakeway, it would come out to about $189 per property, which is significantly lower than most private companies charge for debris removal services. Had the City not spent $1.5+ million on ice storm clean-up, the fiscal outlook may be different. As it is, recapturing some of those dollars will allow the City to continue to provide the quality of service Lakeway residents have come to expect.
TAX RATE INFORMATION
- Current Tax Rate .1290
- No New Revenue Tax Rate .1218
- Voter Approval Tax Rate .1447
- 2023 Approved Tax Rate .1440
HISTORICAL TAX RATE
- FY 2021 .1645
- FY 2022 .1545
- FY 2023 .1290
- FY 2024 .1440