The overview
At an Aug. 4 City Council meeting, Lakeway City Manager Joseph Molis shared details on what he called the “first pass” of Lakeway’s fiscal year 2025-26 budget.
To provide background on the presented budget plan, Molis first shared a presentation highlighting city growth and tax rates since 2012.
What’s happening
The proposed tax rate for FY 2025-26 is $0.16355—a change of $0.00375, or a 2.3% increase, from last year’s $0.1598, according to Molis’ presentation.
In terms of impacts for households, this would mean a total yearly average tax of $1,384, or roughly a $44 increase per year.
The total revenue brought into the city is listed at $20.5 million for FY 2025-26, according to Moliis’ presentation–a drop from FY 2024-25’s $20.6 million. Expenditures are listed at $20.4 million.
Although revenues are lower this year than last year, the city put in work to ensure that expenditures were also reduced, Molis said.
“Most of the departments did a phenomenal job of reducing their expenditures this year,” Molis said. “We really sharpened our pencils, [and] we ended up with about a 1% decrease in overall expenditures compared to last year.”
The background
Since 2012, the taxable value of the city has increased, Molis said. To compensate, the city has decreased the total tax rate over time.
“Since 2012, our taxable value has increased by about $5.8 billion dollars, showing just the stunning growth of the city over the last several years,” Molis said. “The tax rate dropped about 20% to compensate for that.”
However, new growth is now slowing down.
Over the last 11-12 years, new growth remained mostly steady—it made up 2.05% of the city’s revenues in 2014 and held steady at around 1.5% on average over the years, Molis said. However, in the last two years, it dropped. In 2024, it was 1.37%; in 2025, it was 0.83%; and for FY 2025-26, new growth is estimated at 0.4%, according to Molis’ presentation.
What else?
Despite new development slowing down, there are some major projects on the horizon that may temporarily cause spikes in new growth, such as City Center, Molis said. Once that development is finished, however, the city will begin to plateau again.
“[It’s not] all doom and gloom, but it is showing that Lakeway’s growth is starting to stabilize. We’re not dropping, but we’re stabilizing at this point, and it’s going to require us to change how we model our finances in the future.”
What’s next?
At Lakeway’s August 18 City Council Meeting, the city will propose a maximum tax rate and schedule two public hearings, Molis said.
Those public hearings would be held Sept. 15 and Sept. 22, according to Molis’ presentation. The final hearing Sept. 22 will address a tax rate ordinance and budget ordinance.
