Title
Hold a public hearing on the proposed tax rate for the fiscal year beginning October 1, 2025 and ending September 30, 2026.
Body
DATE: September 2, 2025
TO: Kent Cagle, City Manager
FROM: Judith Tangalin, Executive Director of Finance
SUBJECT: Tax Rate Public Hearing for Tax Year 2025/Fiscal Year 2026
BACKGROUND AND FINDINGS:
On August 5, 2025, City Council set the preliminary tax rate at $0.7014 per $100 valuation, adopted a resolution setting a public hearing for September 2, 2025 on the preliminary tax rate for the proposed FY 2026 Budget, and scheduled the adoption of the tax rate for September 2, 2025. The preliminary tax rate establishes the ceiling for the FY 2026 Budget. The actual tax rate can be equal to or lower than the preliminary tax rate and not higher.
The proposed FY 2026 Budget was submitted to City Council using a tax rate of $0.6830. After the certified tax roll and tax rate calculations were received, the proposed tax rate was proposed to change to $0.7014 which brings in an additional $2,499,289 in General Fund and $189,367 in Debt Service Fund as compared to the revenue that was included in the proposed budget. The no-new-revenue tax rate for FY 2026 is $0.6487 and the voter-approval tax rate for FY 2026 is $0.7015. Since the preliminary tax rate was set above the no-new-revenue tax rate, Texas Property Tax Code requires a public hearing be held prior to the adoption of the final tax rate.
Senate Bill 2 from the 86th Legislature changed the laws regarding public hearings for tax rates. The requirement went from two public hearings to one public hearing. In addition, the allotment of time between the hearing and adoption was shortened. As a result, there was a change allowing the governing body to vote on the proposed tax rate at the public hearing per Property Tax Code Section 26.06(d). If the governing body does not adopt the tax rate at the public hearing, the meeting to vote on the tax increase may not be...
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