Ashley Kontnier
DRIPPING SPRINGS — Although the Dripping Springs City Council recently approved an increased maximum proposed tax rate, a calculating error by staff will instead result in residents of Dripping Springs experiencing decreased tax rates in 2027.
At the council meeting Tuesday, Sept. 1, Mayor Bill Foulds explained that earlier in the week, he “was contacted by a resident with concerns over the calculation of our proposed tax rate. After receiving these concerns, the finance department, working with the comptroller, the county and subject matter experts, reviewed the 2026 tax rate workshop and confirmed information that we entered regarding the [tax increment reinvestment zone] was incorrect.”
The error, according to deputy city administrator Shawn Cox, stemmed from a legislative change that went into effect Jan. 1, 2026, related to Line 18D of the Form 50-856, which is the form used for the city’s tax rate calculation.
The specific line in question is used to report tax increment financing. The new legislation requires that the number on the form takes off the portion that the city contributes — 50% in this case, said Cox, who stated that he, instead, used the same calculation as previous years.
“Well, that is the change in calculations that I didn't pick up on. If you look at section 18D, right below it, it says, ‘Add A and B, subtract C and D.’ On the 2025 form, it says, ‘Add A, B, C, and D,’” Cox explained. “So, I was comparing what I thought was apples to apples. Instead, I was actually looking at apples to oranges.”
So, while $704 million was listed on the form, which was certified by the Hays County Tax Assessor-Collector’s Office, the number should have been half of that.
After reevaluating, the finance department determined that the 2027 tax rate should be “significantly” lower than the maximum proposed tax rate of $0.2729 per $100 valuation, which council approved in August.
The current tax rate is $0.2267, while the voter-approval rate for next year is $0.219050.
The voter-approval rate is recalculated annually based on the city's tax base and other factors and is not simply an increase over the previous year's adopted tax rate.
Because the voter-approval rate is lower than the current tax rate, Cox anticipates that the city’s tax rate will decrease in the upcoming year. Specifically, the maintenance and operations portion of the rate is expected to go from $0.1850 to $0.172950, while the interest and sinking rate will go from $0.0418 to $0.0461, for a total tax rate of $0.219050. The effect on individual property tax bills will depend on taxable property values.
“So, yes, there was an error on the city's part and that is why we wanted to have this meeting to address that,” Cox said. “It was brought to our attention by a resident. I am grateful and thankful that it was because it gave us a chance to deep dive back into it, see where we made our calculation error and update that.”
This resident was Heather Oktay, who addressed council during the tax rate public hearing, alleging that the mistake was done purposefully.
“[This is] what seems to be an intentional application, based on a belief of a new interpretation of the law. However, on Aug. 18, when asked about the reasons for the tax hike, the reasons given [by city staff] did not point to a new interpretation. Instead, the reasons given were as follows: changes in assessed property values … the city's overall appraised value increased; the adjusted value used in the tax calculation actually decreased; debt was included in the calculation; [and] it was the first year the calculation incorporated the city's debt. None of those pointed to a 100% use of the $700 million. This was an over $300 million mistake,” she said. “These mistakes are material. They affect the voter-approval rate directly. They are highly questionable and I am asking council to provide full transparency because circumvention of voter election should not be tolerated.”
Although unable to answer specific questions from the dais, Foulds addressed Oktay after she spoke.
“I will speak for staff and for counsel. We are transparent. We've held these meetings. Nine [or] 10 meetings over the last four months and we do everything we can to be transparent. We made a mistake and I appreciate you noticing it and putting us and alerting us,” the mayor said.
Additionally, the deputy administrator stated that he was alerted by the county’s tax assessor-collector’s office that it will not recertify the city’s rates this year, as beginning next year, they will not be certifying forms for any outside entities. Therefore, the council will need to select a designated officer or employee (DOE) — the city treasurer or a third-party company — that can certify the values at its Sept. 15 meeting.
Although Cox recommended continuing with the scheduled tax rate and budget public hearings that night, he also proposed having hearings at the Sept. 15 meeting and adding an extra meeting on Sept. 22 for the final hearings.
“Again, not trying to bury anything ever. This was our mistake. We want to make sure that it's addressed,” said Cox.
In regard to the budget, he explained that the decrease tax rate does not necessarily affect the operating budget and expenditures for fiscal year (FY) 2027, but it does change the balance forward that would go into FY 2028, which was previously anticipated at $1.4 million and will now be at approximately $200,000. It will also limit the amount of supplemental items added to the budget.
Council member Taline Manassian and Foulds agreed that council would need to have another budget workshop to discuss supplemental items prior to setting the tax rate.
Echoing these sentiments was council member Geoffrey Tahuahua, who said, “I still think that we should seriously take a look at our budget and look at some of the places where we are increasing and go over it again with a much more fine tooth comb.”
The question posed by council member Sherrie Parks was how Cox proposed to mitigate such errors in the future, to which he responded that he recommends finding a third-party company to serve as the DOE.
In order to remain transparent, the deputy city administrator said that the certified rates — which will be labeled as “original” — will remain on the truth in taxation page on the city’s website. The revised document will also be posted there, but will remain as a draft until certified on Sept. 15.
To view the original and updated forms, visit bit.ly/4xJTrFE.
To listen to the whole discussion, visit bit.ly/4zPN6Kh.
