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Budget preview: Killeen managers warn of steep local impact from expanded disabled‑veterans tax exemption
Summary
City Manager warned that the statewide expansion of the disabled‑veterans property‑tax exemption will create a large and growing revenue gap for Killeen; staff proposed a modest tax‑rate increase, utility rate adjustments, and cuts to discretionary items to balance FY2027.
City Manager Mark Kaggel presented a detailed FY2027 budget preview on June 16, saying the city faces rising electricity and insurance costs and an expanding policy‑driven revenue gap tied to the statewide expansion of the disabled‑veterans (DV) property‑tax exemption. Staff showed preliminary certified values and projected that the local impact of the exemption increase is large and growing; the presentation cited a multi‑year revenue pressure that cumulatively could measure in the millions.
To balance the draft budget staff proposed a two‑cent property‑tax increase (roughly $2.7 million) and recommended utility rate adjustments—water +5% and sewer +3%—that would increase an average residential utility bill by about $25 per month based on average usage. Manager Kaggel also listed major cost drivers in the general fund including a 3% cost‑of‑living allowance, growing street‑light and technology costs, and civil‑service step increases that compound the personnel budget. Staff presented a list of unfunded operational decision packages totaling roughly $6 million and said none fit in the base budget without additional revenues or service reductions.
Council members questioned the drivers of the DV‑exemption numbers and staff explained how conversions to 100% exemption and the state reimbursement rate affect local revenue. Kaggel told council the city continues to urge state action to fund the statewide exemption and emphasized the choice before the city: raise local revenues, cut services, or find an alternative mix. The manager noted next steps on the budget calendar and that the proposed budget must be posted publicly per changes in state law; he also said staff will continue to refine numbers before the formal adoption process.
What’s next: staff will present the proposed FY2027 budget at the next meeting (calendar posted) and will follow the council’s direction on rates, tax rate setting and which operational packages to prioritize.
