Voters defeated a ballot measure Tuesday that would have lowered city taxes more than 3 cents per $100 of assessed valuation.
Voters cast 1,656 ballots against and 1,241 for the proposal to decrease city property taxes from 45.624 cents to 42.397 cents.
The reduction would have saved the owner of a home valued at $100,000 about $32 annually in taxes.
City commissioners scheduled the election after the Texas City Property Rollback Committee submitted a petition in December with 2,500 signatures. The committee was formed by taxpayers angered by a 17 percent tax increase approved by commissioners in September.
State law allows a petition for a special election on a tax rollback anytime a tax increase exceeds 8 percent.
The ballot measure would have allowed a $1.6 million refund in 2006 taxes.