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SMITHVILLE — Smithville officials are weighing budget cuts, tax rate increases and a possible $3 million tax note as they work to balance the city’s books and minimize spending.
At the city’s second fiscal year 2025-26 budget workshop last month, council members directed staff to restore some previous cuts and explore debt financing to cover rising costs and declining revenues. City Manager Robert Tamble called this year’s budget process “arduous” in his August report, citing growing pains from new property value and exemption reports.
“Taking out a tax note will help us address our short-term infrastructure needs but will increase our debt position,” Tamble said. “Going forward, we desperately need additional large-scale revenue.”
Certified 2025 property values from the Bastrop Central Appraisal District show a 0.72% decrease from last year, with Smithville’s total taxable value falling to about $469.7 million. The average taxable value of a single-family home dropped from $257,902 to $251,837, a 2.35% decline.
Meanwhile, the number of residents qualifying for over-65 exemptions increased from 464 to 500, creating a $154,000 shortfall in property tax revenue, according to city reports. Tamble said the exemption, which locks in future tax bills for residents 65 and older, has grown rapidly since the city approved it in 2021. “Over the past two years, the number of property owners who qualify has skyrocketed,” he said.
In June, the council looked to cut 5% from the budget, or about $836,000, compared with the $16.7 million budget adopted last year. That plan eliminated raises and new hires, reduced citizen services and limited discretionary spending — though council members changed course after community pushback.
The new proposal will restore a 3% cost-of-living adjustment for employees, reinstate health savings accounts, add a new patrol officer and purchase two patrol cars. Other priorities include more funding for paving, sidewalks and drainage.
To fund the proposed spending, officials are recommending adoption of the voter-approval tax rate of 67.88 cents per $100 valuation, a 15.26% increase over last year’s rate and the highest allowable without triggering a rollback election.
Smithville’s financial adviser, Andrew Friedman of Samco Capital Markets, gave council an overview of municipal debt options, recommending a $3 million tax note — $2 million for capital equipment, facility upgrades and infrastructure repairs, and $1 million for wastewater projects.
The council agreed to move forward with a study of Friedman’s proposal, despite opposition from Councilman Mitchell Jameson, who wanted to wait until after the budget workshops. Tamble said municipal debt is common and that Smithville’s financial standing remains strong.
Officials are also working to identify new revenue sources, including grants and long-delayed development projects, according to Tamble.
“Over the past three to four years, we have recruited and identified multiple developers that could bring in between $50 million and $75 million in additional property value if they would simply start and complete their projects,” Tamble said.
The council is scheduled to set the final tax rate at its Sept. 8 meeting, following a public hearing. The next budget workshop is scheduled for 5 p.m. Aug. 20 at City Hall.
