Lakeway council adopts FY2026–27 budget, ratifies tax rate after lengthy debate

The Lakeway City Council approved the city’s FY2026–27 budget and ratified a property‑tax rate of $0.170076 per $100 of taxable value after an extended public hearing and more than two hours of deliberation.

Mayor Thomas Kilgore opened the fiscal discussion by framing the issue as a transition from a growth era to a steady‑state fiscal posture and urging council to address a structural gap. City staff presented the draft budget showing general‑fund revenues of about $20.5 million under the adopted rate scenario and projected expenditures of roughly $20.7 million, leaving a projected operating shortfall of about $200,000 before council adjustments. City Manager Joseph and Finance Director Aaron summarized staff’s multi‑year plan to close the gap; Aaron told the council that year‑to‑date collections put projected year‑end revenues near $20.3 million versus a $20.6 million target and that personnel costs were trending higher.

Residents urged caution: one public‑safety official and multiple department heads asked council to allow staff time to implement a three‑year correction plan rather than pursue immediate layoffs. A staff speaker told the council, “we do not support layoffs” and asked for time to pursue the manager’s plan to restore balance over multiple years.

Council members split over how much to rely on reserves versus additional cuts or a larger tax increase. After amendments and discussion, a 4–3 majority moved to adopt the budget as presented with a $581,000 draw from fund balance to close the remaining gap; the ordinance adopting the budget passed on a recorded vote. The council then ratified the tax rate tied to that budget (vote 5–2). The city attorney confirmed the adoption and ratification complied with state notice and hearing requirements.

The council also directed staff to return with a plan to replenish the fund balance over time and to present future budget proposals earlier in the cycle in a format that shows a structurally balanced baseline. Next steps: staff will begin implementing the manager’s three‑year plan and report progress during regular budget updates.

Vote details: The budget ordinance was adopted 4–3; the property‑tax ratification passed 5–2 (tax rate adopted: $0.170076, of which $0.115873 is M&O and $0.054203 is debt service).