Lakeway to consider adopting de minimis tax rate

Lakeway City Council is set to consider adopting the de minimis tax rate as part of its budget process for the upcoming fiscal year. Under Texas law, this option is available to municipalities with populations under 30,000 and allows a city to set a property tax rate that generates up to an additional $500,000 in revenue above the prior year without triggering an automatic voter election (provided certain conditions relative to the voter-approval rate are met). The discussion comes amid a projected budget shortfall of roughly $1.6 million for fiscal year 2027, driven by rising expenditures tied to population growth and declining development-related revenues as the city approaches build-out.

City officials have been reviewing strategic options to close the gap, including adjustments to tax rates and fees, pursuit of new revenue sources, and efforts to expand the tax base through economic development. Adopting the de minimis rate would give Lakeway greater flexibility than the standard 3.5% voter-approval rate limit while remaining within state guidelines for smaller cities. The matter was expected to be addressed during a City Council special meeting and work session, with further budget and tax-rate decisions to follow in the coming weeks leading up to formal public hearings and adoption later in the year.