Katy property owners will pay a lower tax rate starting Thursday, Oct. 1, after City Council unanimously approved a $90.5 million budget for fiscal 2026-27.

The council voted Monday, Sept. 28, to cut the property tax rate to $0.42 per $100 of assessed value, down from $0.425 in the current year. That is a decrease of half a cent per $100, Community Impact first reported.

The lower rate still means more revenue for the city. Growth pushed total property tax collections up $1.51 million, or 5.8%, over last year. New property added to the tax roll accounts for $241,066 of that increase.

For the average Katy homeowner, the shift is modest. The city's taxpayer impact statement estimates an annual tax bill of $1,552.64 under the new rate, down $6.70 from $1,559.34 last year, based on an average homestead taxable value of $369,676 across Harris, Fort Bend and Waller counties.

Council members Gina Hicks, Johnston Dietz, Paul Follis, Michael Meihls and Paula Taylor all voted for the tax rate. Mayor Dusty Thiele was present but did not vote, which is standard for the mayor in a Texas tax rate vote.

Public safety takes the largest share of the $68.7 million general fund. The police department is allocated $16.4 million for operations and personnel. The fire department gets $11.7 million.

The budget also sets aside $14.6 million for capital improvement projects. The single biggest line item is $6 million for police and fire substations at the Texas Heritage Marketplace, a $400 million mixed-use development at Texas Heritage Parkway and Interstate 10. The council approved a $227,248 land purchase for the substation site in January. Other capital spending includes $2.7 million for a ladder truck, $1.1 million for a reserve engine and $1 million for the Thomas Park site plan.

Water utility revenue will fund an additional $2.2 million in infrastructure work, including $1.1 million in water meter replacements, $300,000 in mainline and tap replacements, and $250,000 in mainline replacements.

All eligible full-time city employees will receive a 1.5% salary increase, which totals a 4% raise when combined with the city's 2.5% step program. Employees already above the maximum pay range still get the 1.5% bump.

The new budget runs through Sept. 30, 2027.