Lakeway City Council reviews FY2026 budget, weighing tax increase to fund capital projects and staff

City Manager Joseph presented the Lakeway City Council with an interactive FY2026 budget worksheet during a special meeting on Aug. 4, laying out revenue projections, departmental requests and capital-improvement priorities and asking council members to use the spreadsheet to test tax-rate scenarios.

The presentation matters because Lakeway’s new-growth revenue has fallen sharply while inflation and debt-service costs have risen, leaving limited headroom for both one-time capital projects and recurring personnel costs without raising the city’s tax rate or reducing transfers to the capital reserve. Joseph told the council, “it is my responsibility to present a budget to you,” and encouraged members to “crunch the numbers between now and the next council meeting.”

Joseph said Lakeway’s taxable value has risen substantially since 2012 — about $5.8 billion — but that new-growth revenue is declining, with new-growth contributions falling from about 1.3% in 2024 to 0.83% in 2025 and “less than half of that” in the current year. He presented several tax-rate metrics the city uses: the no-new-revenue maintenance-and-operations (M&O) rate, an M&O rate adjusted for debt (I&S), and the voter-approval rate above which…