Killeen City Manager, Kent Cagle, presented the finalized proposed budget to City Council members and the community during Tuesday night's council meeting, highlighting council priorities, new positions, and a four percent cost of living increase in employee salaries.
The proposed fiscal year (FY) 2026 budget includes a tax rate of 68.30 cents per $100 valuation, an increase from the current FY 2025 rate of 65.73 cents. This change is driven by an increase in the Interest & Sinking (I&S) portion of the tax rate, which funds the City’s debt obligations. The I&S rate is proposed to rise from 14.66 cents to 17.37 cents, reflecting the recently issued Certificate of Obligation, Series 2025, and the proposed Limited Tax Note, Series 2026. The Maintenance & Operations (M&O) portion of the tax rate—which supports core services such as public safety and parks—is proposed to decrease slightly, from 51.07 cents to 50.93 cents.
The city manager addressed the ongoing impact of the Disabled Veterans Exemption, noting that the total exemption value has grown to over $2.4 billion, representing a significant impact on the city’s tax base. State reimbursement for this exemption has decreased to just 5.69% of the total revenue loss.
Council priorities addressed in this budget include public safety staffing with the addition of four new positions for a Crime Scene Unit, employee compensation improvements, continued community engagement support, infrastructure reinvestment including funding for Zephyr & Rancier Road design, water/sewer upgrades, and civic appearance improvements with underpass painting projects funded in the governmental Capital Improvement Program.
The General Fund expenditures for the proposed FY 2026 budget are $130.8 million, which is $5.1 million higher than the current FY 2025 budget. The city’s population continues to grow, with projections showing Killeen reaching 164,823 residents in FY 2026.
General Fund property tax revenue is projected to increase by $810,675 (1.47%) compared to the prior year. However, this increase is partially offset by other revenue changes, including a significant decrease of $1.2 million in Disabled Veteran’s Exemption reimbursement from the state. Major revenue increases include $2 million in EMS fees, $1 million in investment income, $881,000 in sales tax, and $600,000 in fines income.
Major General Fund expense changes include the four percent cost of living adjustment totaling $3.3 million, civil service step increases of $1 million, $700,000 for Axon equipment and Real Time Crime Center operations, and $225,000 in targeted pay plan adjustments based on a comprehensive compensation survey. The budget also includes funding for new equipment including 24 cardiac monitors and 150 self-contained breathing apparatus units for the Fire Department.
The city received requests totaling approximately $5.6 million for 52 unfunded decision packages across all General Fund departments, demonstrating continued demand for city services as the community grows.
Water and Sewer Fund expenses are projected to increase, with major changes including $1.9 million in debt service from the 2025 Revenue Bond, $916,000 for WCID sewer fixed rates, and a $536,000 sewer line warranty program that will be offset by corresponding revenue increases. Proposed residential water rate changes include a $0.50 increase to the base rate for all meter sizes, as well as proposed updates to volumetric rates per 1,000 gallons. Commercial base rates implement Phase 4 of 5 of the 2022 rate study.
The public hearing on the proposed budget is set for July 22. The preliminary tax rate will be set on August 5, with a public hearing on the proposed tax rate scheduled for September 2. The new budget is scheduled to be adopted on September 2.
The full proposed budget document is available on the City’s website at www.KilleenTexas.gov/Budget.
Residents may also view each City Council meeting in their entirety on the city’s website, www.KilleenTexas.gov/CouncilMeetings, the government channel, and the City’s YouTube channel.