Katy City Council adopts $90.5 million FY 2026-27 budget, lowers property tax rate to $0.42 per $100 valuation

Katy City Council unanimously approved a $90.5 million fiscal 2026-27 budget on Sept. 28 and lowered the city property tax rate to $0.42 per $100 valuation. The budget takes effect Oct. 1 and runs through Sept. 30, 2027.

The city expects $90.4 million in revenues for the year, according to agenda documents. The budget directs spending toward public safety, infrastructure, quality-of-life capital projects, managing growth and staffing.

Of the adopted tax rate, $0.369939 per $100 valuation will go to maintenance and operations, and $0.050061 per $100 valuation is designated for the interest and sinking fund.

Property tax revenue is projected to rise by $1.51 million, or 5.8%, compared with last year because of the city's growth, according to agenda documents. Revenue from new property added to the tax roll totals $241,066. The city estimates the annual property tax bill under the adopted rate at $1,552.

The general fund makes up $68.7 million of the total budget. Within that fund, the police department will receive $16.4 million for operating and personnel expenses, and the fire department will receive $11.7 million for operating and personnel expenses.

The budget also moves $14.6 million from the general fund into the capital reserve fund. Major projects include $6 million for police and fire substations at the Texas Heritage Marketplace development, $2.7 million for a ladder truck, $1.1 million for a reserve engine and $1 million for the Thomas Park site plan.

An additional $2.2 million in improvements will be paid for through the city's enterprise fund, which draws on water utility revenue. That work includes $1.1 million in water meter replacements, $300,000 in mainline and tap replacements and $250,000 in mainline replacements.

City employees will also see pay changes in the new budget. The city is raising all salary grades and ranges by 1.5% for eligible full-time employees, which officials said will total a 4% increase because each step in the raise program is 2.5%. Full-time employees already above the maximum range will still receive a 1.5% increase.

The vote gives final approval to a budget that had already proposed a lower tax rate, and city operations under the new spending plan begin with the start of the fiscal year on Thursday.