Hutto approves new sales-tax sharing deal

Williamson County Emergency Services District No. 3, which operates as Hutto Fire Rescue, approved a new sales-tax sharing agreement with the city of Hutto in May 2026, replacing an earlier arrangement that is set to expire in 2027. The new deal applies to certain properties annexed into the city and preserves a 60/40 split of some local sales-tax revenue, with 60% going to the city and 40% to the district. The change is not the split itself so much as the use of the city’s share: under the new agreement, that money must be spent on emergency-response infrastructure. Community Impact first reported the board action on May 15. ### Which governments are involved in this deal? Williamson County Emergency Services District No. 3 and the city of Hutto are the two parties to the agreement. WCESD No. 3 is the taxing district that serves Hutto Fire Rescue, while the city controls annexation and city infrastructure inside municipal limits. (communityimpact.com) The city has been publicly focused on the issue for more than a year. A Hutto City Council resolution adopted in 2025 said the city supported state legislation that would require an emergency services district to enter a sales- and land-use-tax sharing agreement with a city after annexation, and to use arbitration or mediation if negotiations failed. ### What revenue is being shared? (communityimpact.com) The revenue comes from local sales and use tax generated in areas that were outside city limits and later annexed by Hutto. Community Impact reported that WCESD No. 3 collects a 2% sales and use tax in areas outside city limits to fund fire stations, apparatus and staffing, under authority approved by voters in 2016. (huttotx.gov) Under Texas law, Community Impact reported, an emergency services district may share part of that revenue with a municipality when property is annexed, but it is not required to do so. That helps explain why Hutto and the district have repeatedly negotiated formal interlocal agreements instead of relying on an automatic formula. (communityimpact.com) ### What changes under the new agreement? The new agreement replaces and clarifies a prior deal approved in 2023. The earlier Hutto resolution authorized the city manager to execute an interlocal agreement for the allocation of sales-tax revenue between the city and WCESD No. 3 on Nov. 2, 2023. Community Impact reported that the replacement agreement now clarifies how the money is to be used and takes the place of an arrangement expiring in 2027. (communityimpact.com) The 60/40 allocation remains in place, according to Community Impact. What is newly explicit is that the city’s 60% share must be used only for emergency-response infrastructure improvements. ### What can Hutto spend its share on? Community Impact reported that the city’s share is limited to fire-protection water systems and roadways designed for fire apparatus. (huttotx.gov) Those are the kinds of capital projects city officials and fire officials have tied to growth at the edge of Hutto, where annexation decisions can shift who collects sales tax and who must provide infrastructure. (communityimpact.com) The city has also been advancing separate fire-related projects. Hutto said on May 12 that the City Council had directed the Hutto Economic Development Corporation to purchase land and begin design on a new fire station near the Hutto Megasite, with PBK Architects engaged on the project. ### Why has this been a recurring issue in Hutto? Hutto’s annexation growth has kept the city and the district in negotiation over how tax revenue should follow development. (communityimpact.com) The city’s 2025 legislative resolution shows the issue had become important enough for Hutto to ask state lawmakers for a more formal framework governing annexation-related tax sharing. Public records also show the subject has remained on city agendas and in legal discussions beyond the original 2023 agreement. (huttotx.gov) Hutto agenda materials from 2025 referenced the Williamson County Emergency Services District No. 3 interlocal sales-tax sharing agreement in council materials. ### What happens next? (huttotx.gov) May 21, 2026 is the next city council meeting now listed on Hutto’s public agenda calendar. The city’s agendas and meeting portal show a work session and council meeting scheduled that day at 500 W. Live Oak Street in Hutto. (huttotx.gov) (swagit-attachments.granicus.com)