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Lakeway manager outlines FY2026 budget priorities: $21.3M proposed expenditures, COLA/merit plan and capital asks
Summary
City Manager and Finance Director presented a FY2026 preview showing proposed expenditures of about $21.3 million, a recommended 4.2% salary pool split as 2% COLA and 2.2% merit, capital reserve asks, parks bond spending, and a schedule for tax-rate hearings and adoption.
Lakeway — City Manager Joseph and Finance Director Aaron presented a preview of the proposed fiscal year 2026 budget to the City Council July 21, outlining departmental requests, capital priorities and a recommended salary pool.
Expenditures and personnel: staff presented proposed general fund expenditures of roughly $21.3 million for FY2026, compared with a $20.6 million budgeted baseline for the current year. The proposal includes a $521,000 personnel pool representing a combined cost-of-living and merit recommendation (illustrated as approximately a 4.2% total salary pool split into a 2% COLA and a 2.2% merit pool). Staff emphasized department heads had tightened operating requests and reduced non-essential asks where feasible.
Capital and special funds: staff reviewed special revenue funds (HOT, parkland, tree mitigation, road tax), enterprise fund considerations (solid waste reserves and contract escalators), ARPA obligations and capital reserve plans. Capital reserve asks totaled roughly $3.7 million in one-time department requests and capital projects proposals, including equipment replacements, AV upgrades, the activity center work and road/drainage items. Staff noted the parks bond projects and the transportation bond schedule are in active design and procurement phases.
Key decision points and schedule: staff reminded council that certified property values (truth-in-taxation data) were pending, and that council must set a proposed tax rate and public hearing dates at the Aug. 18 regular meeting. Staff scheduled an Aug. 4 special meeting to begin interactive scenario work with the tax-rate spreadsheet, and anticipated adoption in a special meeting in September after required public notices.
Committee asks: staff presented budget requests from advisory committees (Arts, Economic Development, Heritage, Wildlife), and council asked staff to coordinate possible use of HOT funds for arts and historical markers where statutory carve-outs apply.
Next steps: staff will deliver updated revenue estimates when the certified tax roll arrives, incorporate council direction on priorities (COLA/merit, capital swaps) and return with interactive tax-rate scenarios at the Aug. 4 special meeting.
