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 $8,368,255 (net position). Of this amount $3,766,392 (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 $3,518,621, an increase of $1,305,522 in comparison with the prior year. Of this balance, $3,391,708 is available for spending at the government’s discretion (unassigned). Unassigned fund balance represents 373 percent of general fund expenditures, and 357 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 61:1 based on the current assets of $3,576,987 and current liabilities of $58,366.
Governmental Activities:
- During the year revenues increased by $928,757 (67%), primarily due to property valuation increases and new development.
- Expenses for the year increased by $257,766 (27%), primarily due to debt service, and increase repairs and maintenance expense.
Business-type Activities:
- Charges for services increased by $556,636 (100%) during the year primarily due to water sales, while expenses increased by $222,253 (52%).
Economic Factors and Next Year’s Budgets and Rates
Sales Taxes
In 2022 the Town approved two voluntary annexations of commercial enterprises. These businesses contributed to a record amount of sales tax collections during 2024. Annual sales tax collections totaled $270,085, an increase of 62 percent over fiscal 2023. Our 2024 sales tax collections represent the equivalent of $0.127 in ad valorem property taxes. In comparison, the 2021 collections only represented $0.07 relative to the 2021 ad valorem values. Until additional commercial enterprises are constructed we expect more moderate increases in future collections due to new housing.
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 (i.e., sales taxes and franchise fees).
Property Taxes
After record-breaking increases in property valuations in 2021 - 2022, and more restrained increases in 2023 valuation increases held firm in 2024. Market and taxable valuations increased by 17 and 14 percent respectively. Excluding new housing additions to the tax roll, market valuations of existing homes increased 13 percent over the prior year. The amount of taxable value deferred under the homestead cap continued to increase. The Town is well positioned financially as the 10 percent taxable value increase built into the homestead cap will mitigate any realized declines in taxable values. The Town expects to begin issuing building permits for the Northshore Development in February 2025. New home construction in The Arbors and Enclave is expected to begin in Summer 2025. These values will be reflected in the 2026 tax roll.
Property Tax Reduction and Future Tax Rates
The Town's Maintenance and Operations (M&O) rate is currently $0.25 per $100 and will continue to remain unchanged since the Town's incorporation in 1977. In 2023, the town reduced the tax rate by 20 percent, from $0.45 to $0.36. In 2024, the town again reduced the tax rate from $0.36 to $0.34. An M&O rate of $0.25 and I&S (debt servicing) rate of $0.09. The Town elected to reduce the I/S to $0.09, although the debt servicing payments equate to $0.16. The Town will continue to use general fund reserves and sales tax revenues to pay a portion of the debt servicing to continue to reduce our tax rate. Our tax rate of $0.34 remains substantially lower than surrounding cities, and provides us with additional financial flexibility.
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.