The city will spend 6.2% more than last year on the Katy Fire Department and Katy Police Department, 40% more on funding for drainage and street projects, and 19% more for park improvements, Mayor Pro Tem Chris Harris said in an email. The $34.5 million general fund budget, passed at a Sept. 27 City Council meeting, also features raises for city employees.
park improvements, Mayor Pro Tem Chris Harris said. The $34.5 million general fund budget, passed at a Sept. 27 meeting, also features raises for city employees.
The city is anticipating to receive $47.9 million in revenue in FY 2021-22, 43% from property tax; 42% from sales tax; and 15% from services, fees, grants and donations, Harris said. This is $393,951 more in revenue than fiscal year 2020-21 and $1.4 million more than fiscal year 2019-20. Of the $47.9 million, $34.5 million will go towards the general fund, with the remainder allocated for hotel occupancy, enterprise and debt service.
City Council also approved a property tax rate of $0.447168 per $100 valuation for FY 2021-22, which is the same as the FY 2020-21 tax rate.
Council Member Dan Smith said at the Sept. 27 meeting the city of Katy has distinguished itself from other Texas cities in the budget approval process by maintaining a balanced budget and by not increasing the property tax rate. In comparison, Brookshire and Fulshear increased their respective property tax rates to $0.6522 and $0.20707 this year, according to each city’s FY 2021-22 budget.
"The past months have brought money to many cities across our state that have not been well managed,” Smith said. “Katy, on the other hand, has a balanced budget and addresses many of the things that residents have told me are most important to them.”
Public safety additions
Most of the city’s expenses next year will go toward public safety, which represents 57% of the total budget, according to a Sept. 2 workshop presentation. One public safety initiative in 2022 involves making 16 temporary Katy firefighters, who were hired three years ago using federal funds, permanent employees. The city will also add two new police officer roles and five new firefighter positions.
“If you look at any city, police and fire are the two biggest departments,” Katy Director of Finance Andrew Vasquez said. “And that’s what the citizens want. They want to make sure that the ambulance will show up, or the fire truck will show up when it’s needed, and they want to make sure the police are patrolling around, to keep the crime down.”
Other projects include completing renovations to Fire Station No. 1, which closed in the spring of 2020 due to a mold infestation, as well as renovations to the police station, Vasquez said. Fire Station No. 1, located on Avenue D, reopened Sept. 30.
In addition to adding police and fire department employees, the city will add one part-time animal control employee at the recommendation of an animal control advisory group created in February.
Capital improvements
After public safety, the next largest share of the budget will go toward general government expenses with 24%, followed by streets with 8%.
The city plans to spend $2.64 million this fiscal year on the Street Department, which includes staff salaries as well as expenses, such as tools, concrete, road material and signage. Within this fund, the city plans to spend $250,000 on street rehabilitation projects, $250,000 on underground infrastructure and $290,000 on street lighting, according to the budget.
The city also plans to expand the sewer treatment plant and work on a hike and bike trail that leads to downtown Katy, according to Harris.
Katy officials are also working on drainage projects in the Hunters Terrace neighborhood; on Fortuna Drive and Pecan Lane; on outfall channels, which are structures that allow the outflow of collected water into detentions; and at the flood detention basin near Pitts Road, officials said. The city will spend $50,000 on street drainage projects, according to the budget.
Additionally, city officials are working to bring forward Katy’s first five-year capital improvement plan, which will include any new projects or purchases the city plans to undertake, such as street improvements or purchasing new vehicles, according to Vasquez. The publicly available plan, which will be uploaded to the website within the first half of 2022, will allow citizens to see the city’s long-term plans and what budgets for future years may include.
“This is a living document, so as soon as we identify a need, we can put it in this plan,” Vasquez said.
Revenue growth
While the city’s property tax rate remained the same year over year, the amount of property taxes residents pay will rise due to increased property values. Average homestead values in the city of Katy increased from $274,507 in 2020 to $291,434 in 2021, according to city documents, resulting in an 6.2% increase in tax revenue despite the rate remaining the same.
Texas law requires cities to limit their property tax revenue growth to 3.5% annually, unless voters approve otherwise. This is down from the previous 8% growth rate in place since 1979, according to the Texas Comptroller’s office. Katy’s property tax rate was $0.48 in FY 2019-20—higher than the $0.447168 rate for the last two fiscal years.
Vasquez said the city has not had a problem with keeping the growth rate at 3.5% and maintaining the property tax rate.
“[For] a small city like us, 8% isn’t that much. We still have to be careful with it,” he said. “The leaders of this town [have] controlled the growth in the amount of money we spend, and they’ve done a fantastic job.”
The city expects to double its development revenue in its general fund from $150,000 in FY 2020-21 to $300,000 in FY 2021-22. It also expects $100,000 in development revenue in its enterprise fund after budgeting no funds in FY 2020-21.
The Katy Development Authority, which is funded by the city and outside sources, expects to receive $700,000 this year from the city after receiving no city funds for the past two years, according to the budget.
The city expects to see new development revenue in the coming year, some of which will come from new construction in 2022 at the Katy Boardwalk, a multiuse development near Katy Mills.
Keith Dalton of KBH Venture, co-developer of the Katy Boardwalk District, said although construction has not started yet due to the pandemic, he expects the district’s hotel and conference center—set to begin in 2022—will create value.
“I think that a high-quality hotel and conference center drives economic development activity beyond measure in communities like this,” Dalton said. “If you’re looking to locate your business or your industry in a certain part of Texas, then you certainly want to be at a place where others can come and promote business and meetings at a high-quality conference center and affiliate upscale hotel.”
