PRESENTER: Presenter
Jared Werner, Assistant City Manager
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SUBJECT: Title
Discuss and consider approval of the Proposed 2026 Tax Rate.
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DEPARTMENT: Finance
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COUNCIL DISTRICTS IMPACTED: All Districts
BACKGROUND INFORMATION:
This item is placed on the agenda for the August 19th budget workshop in the event that the council does not take a recorded vote on August 18th.
In order for property owners in the State of Texas to be informed of any increases in their property values, truth-in-taxation requirements were embodied in the Texas Constitution and the Tax Code. Taxing units are required to calculate the No New Revenue tax rate and the Voter Approval tax rate after receiving the certified appraisal roll from the chief appraiser.
The No New Revenue (NNR) tax rate is the total tax rate needed to raise the same amount of property tax revenue from the same properties in both the 2025 tax year and 2026 tax year. The Voter Approval Tax Rate (VAR) is the highest tax rate the City may adopt before a mandatory election is triggered.
The FY 2027 Proposed Tax rate provides sufficient capacity in the General Fund to support critical recurring initiatives. The Debt Service portion of the rate provides capacity to support the planned $2 million tax note for vehicle replacements.
The proposed tax rate will remain the same as last year at 40.8936 cents. The Interest & Sinking (I&S - Debt Service) portion of the rate 19.3921 cents, which remains relatively flat over the previous year, while the Operations & Maintenance (O&M - General Fund) portion of the rate remains relatively flat as well for a total of 21.5015 cents. The total rate of 40.8936 cents is LESS than the No New Revenue rate and the Voter Approval tax rate for this year. The following table is a summary of the tax rate calculations completed by the Comal County Tax Office.
The City Council has the authority to propose a rate higher than the one included in the proposed budget. In the event that the City Council approves a rate different than the current proposed rate, the notices and information on our website will be updated accordingly. It should be mentioned that whatever rate the City Council proposes becomes the maximum rate that can ultimately be adopted for the upcoming fiscal year. Therefore, between the vote on the proposed rate and final adoption, the City Council can consider a reduction but not an increase.
State law requires that a public hearing be held by the governing body before adopting the final tax rate if the proposed rate exceeds the NNR. Therefore, it is not required that the City hold a hearing given that the proposed rate is below the NNR. However, to provide additional notice and opportunity to receive feedback, we will still be holding the tax rate hearing. This hearing will be held on September 10, 2026.
STRATEGIC PLAN REFERENCE:
N/A Economic Mobility N/A Enhanced Connectivity N/A Community Identity
YES Organizational Excellence YES Community Well-Being
FISCAL IMPACT:
Property Tax is one of the primary sources of revenue supporting the General Fund and Debt Service Fund.
Recommendation
RECOMMENDATION:
Staff recommends City Council set the proposed tax rate with a record vote.