Title
Consider an ordinance setting a tax rate of $0.7301 per $100 valuation, comprised of $0.5562 for maintenance and operations and $0.1739 for debt service, for Fiscal Year 2027 (Tax Year 2026).
Body
DATE: September 1, 2026
TO: Kent Cagle, Interim City Manager
FROM: Judith Tangalin, Executive Director of Finance
SUBJECT: Setting the Tax Rate for Fiscal Year 2027 (Tax Year 2026)
BACKGROUND AND FINDINGS:
Texas Tax Code §26.06(c) requires notice of the public hearing on the proposed tax rate to be published at least five days before the hearing. The required notice was published in the Killeen Daily Herald on Sunday, August 16, 2026, for the public hearing to be held on September 1, 2026.
The City Manager’s proposed FY 2027 Budget used a tax rate of $0.7215 per $100 valuation. On August 4, 2026, at a City Council meeting, the City Council set the preliminary tax rate at $0.7301 per $100 valuation. The preliminary tax rate represents the maximum rate that can be adopted for the FY 2027 Budget. The no-new-revenue tax rate for FY 2027 (Tax Year 2026) is $0.7048, and the voter-approval tax rate is $0.7302.
Although the recommended tax rate of $0.7301 is higher than the $0.7215 rate used in the City Manager’s proposed budget, the resulting tax levy is lower because the certified taxable value was significantly lower than the preliminary taxable value. The reduction is primarily attributable to the increased business personal property exemption enacted by House Bill 9.
The FY 2027 Budget presented for adoption has been updated to reflect the certified taxable value, the recommended tax rate, and the resulting reduction in property-tax revenue.
Texas Tax Code requires the vote on an ordinance setting a tax rate that exceeds the no-new-revenue rate to be a record vote and approved by at least sixty (60) percent of the members of the governing body. In order to set the tax rate above the no-new-revenue rate of $0.7048, the ordinance must be approved by at least five (5) members of City Council.
THE ALTERNATIVES CONSIDERED:
N/A
Which alternative is recommended? Why?
N/A
CONFORMITY TO CITY POLICY:
The ordinance complies with truth-in-taxation laws set by the Texas Tax Code and Local Government Code.
FINANCIAL IMPACT:
What is the amount of the revenue/expenditure in the current fiscal year? For future years?
There is no financial impact to the current fiscal year. For FY 2027, the proposed tax rate of $0.7301 per $100 valuation will generate a total tax levy of approximately $79,818,513. The FY 2027 Budget recognizes 98% of the levy, or approximately $78,207,959, as property-tax revenue.
Is this a one-time or recurring revenue/expenditure?
Recurring revenue.
Is this revenue/expenditure budgeted?
Yes. The FY 2027 Budget includes property-tax revenue equal to 98% of the projected levy.
If not, where will the money come from?
N/A
Is there a sufficient amount in the budgeted line-item for this revenue/expenditure?
N/A
RECOMMENDATION:
City Council approve the ordinance setting a tax rate of $0.7301 per $100 valuation, comprised of $0.5562 for maintenance and operations and $0.1739 for debt service, for fiscal year 2027 (2026 Tax Year).
DEPARTMENTAL CLEARANCES:
Finance
Legal
ATTACHED SUPPORTING DOCUMENTS:
Ordinance
Taxpayer Impact Statement
Presentation