Lakeway approves proposed maximum tax rate for fiscal year 2020-21

Lakeway City Council voted to approve a 3.5% maximum property tax rate—which would increase the rate to $0.1694 cents per $100 of assessed value—to help close the deficit in the proposed budget for fiscal year 2020-21. (Brian Perdue/Community Impact Newspaper)
Lakeway City Council voted to approve a 3.5% maximum property tax rate—which would increase the rate to $0.1694 cents per $100 of assessed value—to help close the deficit in the proposed budget for fiscal year 2020-21. (Brian Perdue/Community Impact Newspaper)

Lakeway City Council voted to approve a 3.5% maximum property tax rate—which would increase the rate to $0.1694 cents per $100 of assessed value—to help close the deficit in the proposed budget for fiscal year 2020-21. (Brian Perdue/Community Impact Newspaper)

Lakeway City Council voted Aug. 17 to approve a proposed 3.5% maximum property tax rate—which would increase the rate to $0.1694 cents per $100 of assessed value—to help close the deficit in the proposed budget for fiscal year 2020-21. The current rate of $0.1645 has been in place since FY 2018-19.

Like most cities, Lakeway is dealing with a dip in revenue due to the coronavirus pandemic, and City Manager Julie Oakley said there are several reasons for the deficit in the preliminary $15,057,628 budget.

Lakeway’s total assessed taxable value dropped $14,076,002 year over year to $4,983,732,725. That, Oakley said, compounded with dips in revenue from fines, fees, the swim center and activity center, led city staff to pore over the proposed budget to find line-item savings throughout the budget.

The proposed budget does not include a raise for city employees, and two vacant positions, in municipal court and the police department, have been frozen.

However, four new employees have been included and would be hired at either the six-month or nine-month period of FY 2020-21: a grant program coordinator, a city planner, a fleet maintenance coordinator and an emergency management coordinator—a regional position that will be funded through an interlocal agreement with Bee Cave and The Hills, according to Oakley.


Council Member Steve Smith cast the lone vote opposing the proposed tax rate maximum. The final votes for the tax rate and the FY 21 budget will take place Sept. 28.

Under the proposed new rate of $0.1694, the city tax bill for the owner of a $500,000 home would increase from $822.50 to $847 per year. All of the tax increase is reflected in the maintenance and operations tax rate rising to $0.1263. The interest and sinking debt tax rate will remain the same at $0.0431.

Before approving the proposed tax hike, council discussed dipping into the general fund balance, a rainy-day fund for financial emergencies, to cover the budget deficit instead of a tax hike. Lakeway’s current fund balance is 40% of the annual budget, or roughly $6 million. The fund’s minimum allowed balance is 30%, according to Oakley.

Oakley emphasized that the preliminary budget is subject to change.

Lakeway City Council will host a budget work session Sept. 8. More budget-related meetings are planned and will be published soon before the Sept. 28 votes, Oakley said.

After FY 2020-21 begins Oct. 1, council will periodically revisit the budget, at which point they may add or reduce expenditures based on the city’s financial health, Oakley said.


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