Megan Navarro
DRIPPING SPRINGS— Dripping Springs City Council approved the maximum proposed tax rate of $0.2729 per $100 valuation at its Tuesday, Aug. 11, meeting.
The city is required to set a maximum tax rate — which will be voted on at a later date — to be levied against properties within the city limits.
The tax rate is the sum of two components. The maintenance and operations (M&O) allows for taxing units to spend property tax revenues for any lawful purpose other than debt services and the debt service, or interest and sinking (I&S), is used to pay the principal of and interest on debts or other payments required by contract to secure the debts, according to deputy city administrator Shawn Cox.
“[The] proposed rate is basically what it means for our maintenance and operation, [which] is exactly that: what it takes to maintain and operate the city,” Cox explained. “The debt service, or interest and sinking, rate is what we can assess on the properties to specifically pay off the debt that we issued.”
For fiscal year (FY) 2027, the total indebtedness to be paid by property taxes is $1,044,492.28, which includes $487,922 for Series 2024 — expected to be paid off in FY 2030 — and $556,570.28 for Series 2025, Cox said.
FY 2026 was the first time that the city of Dripping Springs included I&S into its tax rate. The comparable history of previous tax rates include the following:
• FY 2022: $0.1900
• FY 2023: $0.1900
• FY 2024: $0.1778
• FY 2025: $0.1718
• FY 2026: $0.2267 — including $0.1850 M&O and $0.0417 I&S
According to numbers provided by the tax assessor-collector’s office, the city’s M&O rate can be around $0.22 and, with the debt service on top of that, the city could issue a total rate of $0.2729.
“It is an increase from where we are now,” the deputy city administrator said.
Every cent accounts for approximately $226,480, Cox explained; therefore, setting the proposed rate at $0.2729 would increase the revenue that the city receives from $5,134,424 with the current rate to $6,181,988.
Cox recommended setting the proposed rate at the highest number possible. While it does not mean that council has to adopt the rate when that time comes, it just can’t elect to do higher than that: “Even if we wanted to, we'd have an election that we wouldn't want to deal with, but if we published for lower and wanted to adopt higher, we would have to go with the lower rate. So, the inclusion of the higher rate in the notifications is just not to limit council in what decisions they might like to make in the future based on discussions in budgeting,” he emphasized.
Based on the proposed overall tax rate for 2027, compared to 2026, it’s just over a 20% tax increase, but 90% of that 20% is M&O, explained council member Ana Grace Husted, leaving her to question why the city’s operations have increased that much.
While the city’s appraised value went up, the adjusted value based on calculations dropped, Cox clarified. He further explained that “this was the first time they had included our debt on it, as well, because last year, we didn’t have any property tax that was [going] toward debt.”
“Those contributing factors are what helped or what allowed that voter-approval rate. All of our rates came in at around $0.27, so that’s what drove those up was the changes in our assessed values and the tax rate that we were paying our debt off of,” he said.
Council ultimately approved setting the total proposed tax rate of $0.2729 per $100 valuation, which includes $0.2268 M&O and $0.0461 I&S. However, the tax rate will still need to be officially adopted by council.
A public hearing on the tax rate is currently scheduled for 5:30 p.m. Tuesday, Sept. 1.
