Lakeway approves business incentive policy to boost tax revenue
Posted: Thu, 18 Jun 2026 12:39 PM - 6 Readers
By: Diego Hernandez
The Lakeway City Council has approved new economic incentive policies to attract businesses and increase local tax revenue. Historically, the city relied on its strong residential tax base and market appeal for growth without such incentives. However, due to rising community needs, increased business competition, and limited commercial property, officials are shifting to a more proactive recruitment strategy. Incentives may include reduced sales taxes, property taxes, and waived or lowered permit fees. To qualify, businesses must project tax revenue at least matching the highest amount generated in the prior five years. Deals can be voided if thresholds aren't met (twice in five years or consecutively for more than two years), though the council may grant exceptions.
The move comes amid a projected $1.6 million budget gap for fiscal 2027, with expected revenues of $19.5 million against $21.1 million in expenditures, driven by population growth, inflation, and declining development-related income. Council also streamlined special-use permit processes, allowing transfers without reapplication for similar operations and expanding by-right developments (excluding fast-food). While most members supported the changes, concerns were raised about risks with non-property owners. Mayor Tom Kilgore added safeguards like development deadlines and transfer approvals.
