Lakeway City Council unanimously approved a $15.06 million budget for fiscal year 2020-21 and voted to keep the $0.1645 tax rate that has been in place since FY 2018-19.
While the $0.1653 tax rate would have added approximately $8 of property tax to a million-dollar home, according to city officials, council decided that even a modest tax hike during a year when appraised values remained mostly flat seemed inappropriate.
To make up for the $41,000 revenue shortfall created by the continuation of the existing tax rate, council agreed to withdraw that amount of funding from the reserve fund, dropping it from 35% to 34%.
The reserve fund is a rainy day fund that is set aside to be used when revenues hit critically low levels. Lakeway’s reserves could fund city operations for four months without additional sources of revenue, according to city staff. A reserve fund at 100% could fully fund a city for one year.
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