Management’s Discussion and Analysis
Financial Highlights
- The assets of the Town of Lakewood Village exceeded its liabilities at the close of the most recent fiscal year by $10,186,574 (net position). Of this amount $4,858,128 (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors.
- As of the close of the current fiscal year, the Town of Lakewood Village’s governmental funds reported ending fund balance of $4,410,377, an increase of $870,166 in comparison with the prior year. Of this balance, $4,210,421 is available for spending at the government’s discretion (unassigned). Unassigned fund balance represents 384 percent of general fund expenditures, and 369 percent of total governmental fund expenditures. At the close of the current fiscal year, the Town of Lakewood Village’s governmental funds had a current ratio of approximately 67:1 based on the current assets of $4,476,823 and current liabilities of $66,446.
Governmental Activities:
- During the year revenues increased by $289,486 (12%), primarily due to property valuation increases and new development.
- Expenses for the year increased by $190564 (16%), primarily due to debt service, and increase repairs and maintenance expense.
Business-type Activities:
- Charges for services increased by $261,116 (23%) during the year primarily due to water sales, while expenses increased by $66,067 (8%).
Economic Factors and Next Year’s Budgets and Rates
Sales Taxes
Sales tax collections for 2025 increased significantly and we expect this trend to continue due to several factors. The Town initiated discussions with several commercial enterprises, with two annexing into the Town. We expect to finalize developer agreements and commercial construction to commence in the second quarter of 2026. In addition, there are five new residential housing developments underway with approximately 25 % of the units occupied. We expect to see significant additional units completed and occupied in 2026 which will increase our resident driven sales taxes.
These results support the Town’s strategic shift away from wealth related taxes (property taxes) and toward a greater reliance on discretionary consumption-based taxes and user fees (i.e., sales taxes, franchise fees, utility service fees).
Property Taxes
Overall appreciation in valuations moderated with approximately a 3% increase on existing homesteads. However, due to previous homestead cap limitations, taxable values increased by a significantly greater amount. Existing new homes entering the tax role will increase the existing tax role by over 100 percent over the next three years. In addition, new annexations of commercial properties will contribute to the tax base in 2026.
Property Tax Reduction and Future Tax Rates
The Town continued its practice of lowering the tax rate in fiscal 2026. The overall tax rate was lowered from $0.34 to $0.32 per $100 of valuation. For long-range strategic purposes, the Town reconfigured the tax rate composition. The previous rate was composed of $0.25 s Maintenance and Operations (M&O) rate plus $0.09 Debt Servicing (I&S) for a total of $0.34. For 2026, the town adopted an M&O rate of $0.32 and a debt rate of zero. Paying debt servicing out of M&O funds allows for maximum financial flexibility to meet the changing needs of our rapid growth. Given our forecasts of large increases in our tax base and sales tax collections, we anticipate that the tax rate will decrease annually.
Request for Information
This financial report is designed to provide a general overview of the Town of Lakewood Village’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Mayor, 100 Highridge, Lakewood Village, Texas 75068.