City proposes tax rate for public hearings

The San Marcos City Council voted six to one, with San Marcos City Council Member Shane Scott with the dissenting vote, to set the maximum proposed tax rate of 60.3 cents per $100 of taxable value leading into the Sept. 3 and Sept. 24 public hearings on the tax rate. Jon Locke, San Marcos Finance director, said Tuesday the council selected the maximum proposed tax rate, which establishes the ceiling for the Fiscal Year 2025 tax rate. City council will set the tax rate on Sept. 17, which can be the same or lower than 60.3 cents per $100 of taxable value.

Locke said the no-new-revenue rate, or the rate that would produce the same amount of revenue as the previous fiscal year on properties taxed in both years, is 59.96 cents. The proposed rate is 60.3 cents, which is the same as the tax rate used for the current fiscal year. The voter- approval tax rate is 70.36 cents, which is the tax rate that increases the no-new-revenue rate by 3.5%, plus the debt rate, plus any unused increment from the prior three years. Locke said exceeding the voter-approval rate will require that it is placed on the ballot for voter approval.

Locke said the proposed rate of 60.3 cents per $100 of taxable value would create $52,074,830 in revenue.

“There are two components to the tax rate: the operations and the debt. And in Fiscal Year ‘25 the operations component is 45 cents, and the debt component is 15.3 cents, which is about 25%,” Locke said. “We use the debt to fund those major capital projects that we issue debt for and pay for over its useful life, and we use the operations for the core services, council strategic goals, investing in employees as well as any special programs.”

Locke said from 2022 to 2023 the net taxable value of properties within the city grew by $1.5 billion, but growth in the taxable value in San Marcos did not grow at the same pace as previous years.

“As we move into the current year, from ‘24 to ‘25 it grew by $464 million,” Locke said. “Where it says remaining net taxable value, that is what the city has to operate off of…When you look at the remaining net taxable value, the total amount grew 4.5%, which is well below what we have been experiencing.”

Locke said the homestead average value growth is 12%.

“In Fiscal Year 25, when you go from ‘24 to ‘25 that has grown by 1,500 homesteads,” Locke said. “You can see from ‘24 to ‘25 the average assessed value went up by $27,000. When you apply the homestead exemption to that, the $15,000, you arrive at what the taxable value of that property is. The tax rate is being proposed to stay the same, to be the current tax rate, so there’s no change there. And the annual tax levy difference between ‘24 and ‘25 is $164 more. On a monthly basis, that would be $14.

Locke said that of the 1.5% sales tax rate, 0.5% of that goes to property tax relief.

“If we did not have this in place, our tax rate would be over 14 cents higher,” Locke said. “To generate the same amount of revenue that we do, we would have to have a tax rate of just under 75 cents. … [The annual tax levy] would be over $500 higher.”

Locke said in both 2023 and 2024 there was a large growth in existing property appraisal growth and new property taxable value added. In 2024, there was 64% existing property value growth and 36% new property taxable value added. For taxes collected in 2025, there is a -24% existing property appraisal growth and 124% new property taxable value added.

“Part of that is when you think of [how] Texas State University purchased two apartment complexes that took $77 million dollars off of the tax roll. That plays into that,” Locke said. “Fortunately, there’s over $500 million of new value added.”

Locke said there were a total of 722 new residential units added, which had a taxable value of about $200 million. There were 24 commercial units added, which had a taxable value of about $200 million.

“For every commercial unit that was added, the average value added was over $8 million compared to $278,000 residential, which is why it’s important to diversify the tax base,” Locke said. “You can see that commercial units tend to use less city resources, and they bring in more tax revenue. It helps subsidize the residential units, which lessens the tax burden for residents.”