MCGREGOR, Texas (KXXV) — McGregor city leaders are considering raising the property tax rate, a move that could have ripple effects for local small businesses.
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All Star's Barber Shop has been a community gathering place in McGregor for more than a decade. Owner Eric Benitez says the costs of running a small business in the growing Central Texas city have climbed steadily.
"They are pretty high and they do increase as the years go by, as you know, the town's growing and everything, but they do increase," Benitez said.
City leaders are considering raising the property tax rate by 3.5 cents per $100 valuation. Benitez says those higher costs could eventually reach his customers.
"At first it didn't, but now it's getting to the point where we have to possibly start thinking about increasing prices just because everything's gotten more expensive, especially the property taxes. So maybe, yes, in the near future, prices will have to increase just for those type of reasons," Benitez said.
He says the financial pressure has already affected his clientele.
"Yeah, sometimes we do see a decline in clients or it takes them a little longer to come back to come see us just because everything increases... but it's just something that has to be done whenever taxes and everything else gets more expensive for us," Benitez said.
City of McGregor Financial Director Lee Klump says revenue from industrial development has helped keep local tax rates lower over the past 5 years. Under the proposed rate for 2026, a homeowner with a median home price of $207,449 would pay almost $1,200 in city taxes — a $73 jump from a 2025 city property tax bill of a little more than $1,100.
Despite the uncertainty, Benitez remains hopeful.
"Hopefully everything works out and we'll still be able to stay in business for the long run and find a way to make it all work," Benitez said.
The city will hold a public hearing on August 17 before taking a final vote on the proposed tax rate. If approved, the new rate would take effect beginning October 1.
Q&A With Lee Klump
Q: What changed as far as spending compared to last year’s budget?
A: One change that is important to note: funds from the sale of Industrial Park land are being used for general purchases of long-term capital to better serve the citizens and has no effect on rates provided by the McLennan County Tax Office. All of this money is non-operating revenue, funding non-operating expenditures
Q: What will this proposed tax increase mean for McGregor homeowners and business owners?
A: From the McLennan County Tax Office: the median value homestead in McGregor is valued at $207,449. The proposed rate will create an estimated property tax bill of $1,176.21.
Q: When do you expect industrial developments to begin generating additional tax revenue for the city?
A: This has already happened and will continue to happen. Even with the rates provided by the McLennan County Tax Office this year, this tax rate is lower than it was five years ago, and that trend can be seen even before then (for tax year 2020, McGregor's tax base was 427,135,951 and the rate was 0.601413). The trending decrease in rates is because of the real growth recognized in McGregor.
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