The City of Dripping Springs is voting to adopt their Tax Rate and 2024-25 FY Budget on Tuesday September 17th at the Dripping Springs City Hall Council Chambers (511 mercer Street, Dripping Springs, TX 78620) at 6pm!

According to the City of Dripping Springs Notice of Public Hearing on Tax Increase, the situation is as follows:

Tax Rate

2023 (adopted): $0.1718 per $100/value
2024 (proposed): $0.1794 per $100/value
4.42% increase
No-new-revenue tax rate: $0.1702 per $100/value
Voter-approval tax rate: $0.1794 per $100/value

Property Value

2023 average taxable value of homestead: $679,291
2024 average taxable value of homestead: $617,653
9.07% decrease

Tax Bill (city portion only)

2023 tax bill on average homestead (actual): $1,167
2024 tax bill on average homestead (proposed): $1,108
5.05% decrease

Tax Levy

2023 levy (actual): $3,343,346
2024 levy (proposed): $3,236,279
3.2% decrease

A few things to note about the information above, the proposed tax rate = the voter-approval tax rate limit, which means the city is considering increasing its property tax revenue by the maximum amount allowed without voter approval. Another observation is that city officials estimate a major decrease in the taxable value of (-9.07%). They had less new construction contributing to their taxable value, and the projects they did add were at lower price points. Based on what they have in the pipeline, they expect even less new taxable value next year for the same reason.

Here is a quick look at the Dripping Springs budget growth over the last five years—and it is up in a considerable way. Consider the following:

Adopted Budgets – General Fund Expenditures

FY 2021: $7,064,762

FY 2022: $8,964,647

FY 2023: $11,791,542

FY 2024: $13,128,993

FY 2025 (proposed): $13,130,616

5-year budget growth: +85.9%

Note the FY 2025 amount is very likely a placeholder, meaning the actual level of budget growth may be much more pronounced. Even if it’s not though, we’re looking at a nearly 100% spending increase over the last 5 years.

The public hearing will be held Tuesday September 17th at the Dripping Springs City Hall Council Chambers (511 mercer Street, Dripping Springs, TX 78620) at 6pm.

Did you know that your local taxing entities can adopt a tax rate that won't raise your property taxes, even if your property valuations have increased?

The No New Revenue Rate is the adoption of the tax rate that would produce the same revenue as the previous year, resulting in a lowered rate to offset the increased revenue caused by inflated home appraisals. In turn, this would produce a lower tax bill for Texans. As school districts, municipalities, and counties adopt their budgets, they will be considering the revenue rate that will need to be adopted to accommodate for the budget they adopt.

In the 88th session, the Texas Legislature passed the largest property tax relief bill in Texas history. This package secured $18 billion in relief in the form of increased homestead exemptions, a school maintenance and operations buy down, appraisal caps, and more. However, the relief packages the legislature passes become obsolete for some homeowners when local taxing entities adopt new revenue rates, which increase your taxes once again and nullify the cuts made by the legislature. Encourage our local governments to adopt a No New Revenue Rate when looking at the budgets for the next fiscal year. Click here to read more about No New Tax Revenue Rates.

The City of Dripping Springs asked that we share the following budget background and highlights:

“Current Census calculations for the City show our estimated population at 8,689, which is a 91% increase from the 2020 census which placed our population at 4,650. To accommodate this growth, the City has had to increase its full-time staff to seventy (70). The City has had to more than double its staff since FY 2020.

“While our Proposed Tax rate of $0.1794/$100 valuation is higher that the $0.1718/$100 valuation, the proposed increase is being suggested due to the increase costs for the City.In FY 2025, the City has budgeted $1.1 million to remodel the current City Hall in an effort to accommodate the necessary increase in staffing. This is on top of the recent building purchase of the old PEC property in the City, which is being used for our Development Services. The City did take on debt to purchase a portion of this property. However, this annual expenditure is not funded by a “Debt” tax rate, but rather is being covered by our M&O Rate. The annual cost for this purchase is $486,000.00. Additionally, the City is funding $865,000.00 for a future debt issuance for the remodel of the City’s historic Stephenson Building and improvements to Old Fitzhugh Road. While a future “Debt” rate is being considered, for FY 2025, this is being funded through our M&O Rate. Additionally, the City has budgeted $532,000.00 in park improvements, which included planning for future parks and infrastructure improvements to existing parks.

“While annually, the City works within the constraints of its M&O rate and fees collected, the five-year capital plan shows a need for over $61.0 million in project funding. This is outside of the $5.73 million the City has been allocated from other funding sources (Grants, HOT funds, etc.).

“While the City does utilize the majority of its revenue earned from property taxes each year, Council has historically taken steps to plan for the City’s future needs as well. Included in the FY 2025 proposed budget is $115,083.00 which is being transferred to the Vehicle & Equipment Replacement Fund, and was created to fund future vehicle and equipment purchases. Council will also be allocating $500,000.00 to the City’s Reserve Fund (Rainy Day Fund). This contribution is made annual in an effort to prepare for any unforeseen decreases in revenues.”

I will continue to urge local taxing entities to combat rising property taxes, support transparency throughout their budgeting processes and to update you all on upcoming budget meetings.

City of Dripping Springs Voting to Adopt Budget