Marble Falls has a new budget and tax rate for the coming 2026-27 fiscal year. The city’s tax rate will be higher than last year, a measure taken by city leaders to counteract a perceived “perfect storm” of financial challenges that converged this year. 

According to city staff, three key factors contributed to the city’s increased tax rate: a drop in projected sales tax revenue, a drop in taxable property values, and a rise in debt service payments. While the city made cuts to its budget, omitted merit-based raises, and left off any new positions, this was not enough to balance the books. The property tax rate was increased to maintain the current level of municipal services and to offset the financial challenges facing the city.

“Marble Falls is used to high growth and addressing infrastructure needs to address that high growth,” Finance Director Jeneen Peterson told DailyTrib. “The growth didn’t stop, but it plateaued.”

Marble Falls City Council approved the new budget and tax rate during its regular meeting on Sept. 15.

“There is a perfect storm hitting this year,” Place 2 Councilor Willam “Dee” Haddock said during the meeting. 

The tax rate was raised by about 8.41 percent this year to compensate for a $59.2 million drop in taxable property value, a lower-than-expected sales tax revenue increase, and a large increase in debt service obligations. City leaders were adamant that this was more of a “hiccup” than a new standard.

“It was not part of the plan for our other primary revenue sources to drop off,” City Manager Caleb Kraenzel told DailyTrib. “This is not the new normal, this is an anomalous year. We want to get back to the normal of the past, where we slightly cut the tax rate and let sales tax proceeds help the residents with their tax bill.”

Dropping taxable property value

The new tax rate of $0.5800 per $100 property valuation is about 8.41 percent higher than the current year’s $0.5350, which is a departure from the city’s typical behavior. Since at least 2011, the city has either kept the tax rate relatively the same, or made significant cuts as property values have risen. But, this is the largest jump in the rate the city has since at least 2010.

This year, the median price of a home in Marble Falls is $391,602. With the new rate, a median homeowner would see a $2,271 tax bill, representing a $123.53 increase in annual property taxes from last year. 

But, the rare rate hike is accompanied by a rare drop in assessed property values. For the first time since at least 2013, taxable property value is down in Marble Falls. The city went from roughly $1.660 billion in total taxable value to $1.601 billion in taxable value, a 3.6 percent drop, in the 2026-27 fiscal year. 

With less property value to collect taxes on, the city was down about $419,387 in property tax revenue from last year. 

Tax rate breakdown

The city’s tax rate is split between its interest and sinking rate (I&S) and its maintenance and operations rate (M&O). The I&S rate can only be used to pay down debt and the M&O rate can only be used to fund the regular operations of the city. 

The new $0.5800 tax rate is mostly made up of the $0.3597 I&S rate which comes out to around 62 percent of the total. The M&O rate actually went down from $0.2351 to $0.2203 in the new budget. This means that the majority of the tax rate increase and property taxes is going toward debt payments, and revenue dedicated to running the city has actually been reduced. 

Operations

The city should take in about $3.605 million in property taxes for the general fund with its new rate. The general fund makes up the backbone of most city services, like police, fire, parks, streets, administration, and other departments that help make Marble Falls tick.

In total, the city expects to bring in about $21.479 million in total revenue to support its general fund through property taxes, sales taxes, and other sources in the coming year, and it has budgeted for $21.444 million in expenditures. Sales tax makes up the largest portion of the city’s revenue, with a projected $10.809 million this fiscal year. 

According to Finance Director Peterson, the city would have to raise its tax rate to $0.70-$0.79 cents to maintain its level of services if it did not have such robust sales tax revenue. 

But, sales tax underperformed this year, leading to far more conservative estimates going into the coming year. When developing the original FY 2025-26 budget, the city projected about $11.380 million in revenue from sales tax, but that number ended up being closer to $10.546 million. This went counter to the typical trend of 2-4 percent growth in sales tax revenue that has been seen historically, with only a slight increase of about 0.54 percent projected by the end of the year on Oct. 1.

Revenues for the general fund have been reduced by about 2 percent from last year, with $445,027 cut from last year’s budget.

General fund revenues ($21,479,654) are broken down roughly as follows:

• Sales tax- $10.809 million
• Property taxes- $3.605 million
• Charges for services- $2.358 million
• Transfers in (from other accounts)- $2.069 million
• Franchise fees- $847,656
• Licenses and permits- $640,283
• Fines and forfeitures- $488,999
• Miscellaneous- $324,934
• Intergovernmental- $245,363
• Mixed beverage- $90,058

General fund expenditures ($21,444,961) are broken down as follows:

• Police- $4.703 million
• Fire- $3.095 million
• Parks and Recreation- $2.952 million
• Streets- $2.245 million
• Highland Lakes Regional Emergency Communications Center– $2.183 million
• Administration- $1.872 million
• Development services- $1.254 million
• Finance- $$824,139
• Human resources- $460,766
• Facilities- $444,230
• Engineering- $430,947
• Court- $379,925
• Drainage- $337,083
• Non departmental- $243,028
• Mayor and City Council- $18,350

Debt

The city’s debt services also rose significantly from FY 2025-26. Last year’s budget had about $5.352 million in debt payment requirements for the debt service fund and the coming year will have about $6.205 million, a 15.9 percent increase. 

About 62 percent of the city’s tax rate, $0.3597 out of $0.5800, will go toward debt service payments in the new budget. 

According to Finance Director Peterson and City Manager Kraenzel, the uptick in debt services is due to principal amounts coming online in the coming year for capital improvement projects like the city’s new fire station on the south side of town, the Pecan Valley sidewalk project, and other infrastructure upgrades. 

The city also has debt in the utility fund, largely due to the One Water treatment plant, and at roughly $130 million it is the largest project the city has ever undertaken. 

The utility fund has annual debt service payments of about $6.847 million in the FY 2026-27 budget. These payments are made through utility rate fees collected by the city rather than from taxes. 

In total, the city has about $147.593 million in total debt obligations and is responsible for a total of about $13.053 million in annual debt service payments. 

dakota@thepicayune.com