Page 22 - CityofSouthlakeFY26AdoptedBudget

annexations, when the two years are compared.

If a city adopts a tax rate exceeding the no new revenue rate, the city must call and hold a public hearing
to discuss that action. Additionally, if a city adopts a tax rate exceeding the voter approval rate (3.5
percent M&O growth, plus “unused increment rate”), the city must hold an automatic election. Depending
on the ultimate rate that is chosen by the City and its relationship to these legally defined rates, there are
requirements that must be followed to comply with truth-in-taxation laws. These requirements protect
the public’s right-to-know concerning tax rate decisions. The following table provides an overview of
these rates:

Voter Approval Rate
No New Revenue Rate Voter Approval Rate Adjusted for Unused
Budget Overview
Increment
FY 2026 $0.274049 $0.299414 $0.364506

On August 5, 2025, the City Council considered and provided direction on establishing the property tax
rate for FY 2026. Staff prepared two tax relief options shown in the table below:

Rate
Facility
Tax Rate
Reduction Reduction Average General Maintenance Vehicle Technology
Valued
Fund
Options Tax Rate from - Revenue Home CIP Cash Reserve Replacement Fund
Current Transfer Transfer
Tax Rate Impact Tax Bill Funding Transfer
No New
Revenue $0.274049 $0.030951 ($3,626,852) $2,510 $0 $1,500,000 $1,000,000 $1,000,000
Reduced
New $0.295000 $0.01 ($1,363,624) $2,702 $1,500,000 $2,000,000 $2,000,000 $1,000,000
Revenue

The City Council chose to set a ceiling for the tax rate at the adopted “Reduced New Revenue” rate of
$0.2950 and took action at that meeting to call a public hearing on the tax rate for August 19, 2025, in
compliance with truth-in-taxation laws.

As a result of that discussion and action, this budget has been prepared with a property tax rate of
$0.2950, providing a $0.01 cent reduction from the FY 2025 rate of $0.305. With this rate adoption,
the City will be implementing its fifteenth tax relief measure. This long commitment has helped offset
increasing costs for property owners.

In keeping with the City’s longstanding commitment to tax relief, the budget retains the maximum
allowable 20% homestead exemption, which complements the existing $75,000 exemptions for
homeowners over 65 and for disabled residents, as well as the over-65 tax freeze. Together, these
provisions continue to reduce the amount of taxable value subject to the City’s property tax rate,
delivering meaningful savings to Southlake homeowners.

For an average-valued home, the 20% exemption lowers taxable value by $222,617, producing an effective
tax rate savings of roughly 5.9 cents per $100 of valuation. After accounting for both the exemption and
the adopted tax-rate reduction, the equivalent residential rate on an average-valued home is $0.236.

22 FY 2026 City of Southlake | Budget Book FY 2026 City of Southlake | Budget Book 23