Property taxes go up as sales taxes drop
The average homeowner’s tax bill will increase under the Fiscal Year 2026 budget proposed by the city.
Some homeowners could see their taxes jump by $80 under the proposal, which is prompted by an estimated drop in sales taxes, according to a presentation heard during the Thursday, Aug. 14, City Council meeting.
Chief Financial Officer Robert Powers presented a budget based on collecting the maximum amount allowed under Texas law, using the voter-approval rate of 58.5 cents per $100 of property value.
A no-new-revenue rate, which would keep homeowners’ tax bills about the same as last year, is 51.238 cents per $100, but the city is going with the other option.
“The city manager’s budget is based on a tax rate of 58.5 so we would recommend that you set that ceiling at the voter- approval rate as we work through the process,” Powers told the council.
The council voted to approve $0.585 as the maximum tax rate, but members have the option to lower it. They can choose to reduce the rate and decrease the budget anytime before a final vote on Sept. 10.
Under state law, a budget must be in place by October. 1.
The tax rate has two parts. Of the 58.5 cents, 37.1924 cents would be for maintenance and operations and 21.3076 would go toward paying down debt.
While the proposed rate is lower than last year’s of 59.1368 cents per $100, it would increase the average homeowner’s bill by about $80. It will collect an estimated $5.6 million more in total property taxes. About $2.7 million of that total will come from new property added to the tax roll this year.
“We like to brag about the rate coming down but really we’ve maintained a flat dollar amount pretty much,” said Councilman Kelly Cmerek.
The average tax bill has increased from $1,286 to $1,495 over the past five years due to increased property values and increased city expenses, officials said.
Powers said the reason an increase in property-tax revenue is necessary is due to a decrease in sales-tax revenue.
Mayor Dwayne Ariola said that many of the properties that would add revenue to the city aren’t on the tax rolls this year, and a decrease in estimated sales-tax revenue necessitates the higher property-tax rate.
“The sales tax tweaked down significantly so we have to make it up somewhere,” he said. “You can’t assume the sales tax revenues. You can’t put lipstick on a pig.”
As of January 2025, the city has grown its property tax base from $2.92 billion to $4.59 billion, representing significant growth.
“It’s 57% above last year. I think we’re all aware the vast majority of that increase from last year is related to the development at (Samsung Austin Semiconductor),
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“The sales tax tweaked down significantly so we have to make it up somewhere.”
— Mayor Dwayne Ariola
but it still trends well for the future,” Powers said.
Most tax revenue collected on improvements at the Samsung facility do not go into the city’s general fund, but into a tax increment reinvestment zone as part of an incentive agreement.
The budget includes a $4.26 million increase in spending over last year in the General Fund, which pays for the majority of the city’s daily operations.
More discussion by the council on the budget-and-tax rate is set for Aug. 28. A public hearing is Sept. 10, and then the council will vote on whether to adopt the budget and the tax rate.
