Title
Consider a memorandum/resolution setting the preliminary property tax rate for the Fiscal Year 2026 Annual Budget and setting the date to hold a public hearing.
Body
DATE: August 5, 2025
TO: Kent Cagle, City Manager
FROM: Judith Tangalin, Executive Director of Finance
SUBJECT: Setting the Preliminary Tax Rate & the Date of the Public Hearing
BACKGROUND AND FINDINGS:
Truth-in-taxation laws require the governing body to publish notice and hold a public hearing if the proposed tax rate exceeds the lower of the no-new-revenue tax rate or the voter-approval rate. The following tax rates per $100 valuation are relevant to the proposed FY 2026 Budget:
|
Current Rate |
0.6573 |
|
No-New-Revenue Rate |
0.6487 |
|
Notice and Hearing Rate |
0.6487 |
|
Budgeted Rate (Preliminary Tax Roll) |
0.6830 |
|
Budgeted Rate (Certified Tax Roll) |
0.7014 |
|
Voter-Approval Rate |
0.7015 |
The preliminary tax rate serves as the maximum rate the City Council may adopt. The final rate may be equal to or lower than this amount but cannot exceed it.
Since the proposed rate of $0.7014 exceeds the no-new-revenue rate, setting the preliminary rate at this level requires a record vote and a public hearing.
The public hearing is scheduled for September 2, 2025, with adoption of the tax rate to occur the same day. State law permits the governing body to adopt the rate at the hearing or within seven days following it. The required notice must be published at least five days before the hearing.
|
Taxpayer Impact |
Current FY 2025 |
Proposed FY 2026 |
Difference |
|
Median-Valued Homestead |
$220,915 |
$233,428 |
$12,513 |
|
Tax Rate |
0.6573 |
0.7014 |
0.0441 |
|
Annual Property Tax Levy |
$1,452.07 |
$1,637.26 |
$185.19 |
|
Monthly Cost |
$121.01 |
$136.44 |
$15.43 |
|
Property tax amount = tax rate X taxable value of your property / 100 |
THE ALTERNATIVES CONSIDERED:
|
Rate Type |
Tax Rate |
Tax Levy |
Difference |
|
Current Rate |
$0.6573 |
$71,903,875 |
($4,561,587) |
|
No-New-Revenue Rate |
$0.6487 |
$71,014,313 |
($5,451,148) |
|
Budgeted Rate (Preliminary Tax Roll) |
$0.6830 |
$74,185,638 |
($2,176,387) |
|
Budgeted Rate (Certified Tax Roll) |
$0.7014 |
$76,465,462 |
- |
|
Voter-Approval Rate |
$0.7015 |
$76,475,805 |
$10,344 |
Which alternative is recommended? Why?
Staff recommends setting the preliminary tax rate at $0.7014 and setting the date of September 2, 2025 for the public hearing. The certified roll supports the same rate.
CONFORMITY TO CITY POLICY:
This recommendation complies with Truth-in-Taxation requirements under the Texas Property Tax Code.
FINANCIAL IMPACT:
What is the amount of the revenue/expenditure in the current fiscal year? For future years?
This action does not impact the current fiscal year budget. It determines the maximum tax rate allowable for the upcoming FY 2026 Budget.
Is this a one-time or recurring revenue/expenditure?
N/A
Is this revenue/expenditure budgeted?
N/A
If not, where will the money come from?
N/A
Is there a sufficient amount in the budgeted line-item for this revenue/expenditure?
N/A
RECOMMENDATION:
Staff recommends setting the preliminary tax rate at $0.7014.
DEPARTMENTAL CLEARANCES:
Finance
Legal
ATTACHED SUPPORTING DOCUMENTS:
Presentation