What you need to know
There were several tax rates that they discussed at the meeting.
According to city documents, the current tax rate, which has remained the same since fiscal year 2022-23, is $0.603 per $100 of taxable value.
The no-new-revenue tax rate is $0.6278 per $100 of taxable revenue and would produce the same amount of revenue as last year on the same properties, even if those property values have changed. San Marcos City Manager Stephanie Reyes said during the work session that this rate would “provide stability today but creates large shortfalls, starting in 2027.”
The long-term focused rate is $0.6496 per $100 of taxable value, which was recommended by city staff to address current and future needs.
The voter-approval tax rate is $0.7047 per $100 of taxable value, which would require an election if the tax rate were set any higher than that amount.
Zooming in
San Marcos Finance Director Jon Locke presented two additional tax rates based on council feedback from the work session that were not included in the agenda packet. The break-even rate is $0.6817 per $100 of taxable value and would generate enough revenue to cover the shortfall that would be created if using the no-new-revenue tax rate in FY 2026-27, which is $5.6 million, plus enough to cover cost-of-living adjustments for staff. Another rate that was proposed was the $0.6769 per every $100, which would increase the revenue enough to cover the FY 2026-27 shortfall without covering a COLA for staff.
Current situation
From 2022 to present, 2025 was the first year that had a decrease in existing property values by $1.4 million, according to Locke. If it weren’t for new developments, overall property value would have declined for FY 2025-26. New developments added $1.8 million to the tax roll for FY 2025-26.
What’s next
The public hearing dates are set for Sept. 2 and Sept. 16, when council will set the final FY 2025-26 tax rate. Council asked staff to bring a tax rate back for the next meeting that would cover the FY 2026-27 shortfall without the additional revenue.
