Houston residents will get the largest city tax cut in years, as the revenue cap voters imposed a decade ago begins to have its first noticeable impact on the city budget.

The City Council on Wednesday unanimously adopted the new property tax rate, about 60 cents per $100 of home value, down from about 63 cents. The new rate is the lowest since 1987.

The cut will save the average homeowner with a standard homestead exemption about $50 next year. That follows a $12 savings for the same home this year, after the revenue cap had taken effect for the first time. City data show the average Houstonian's taxes still are rising, however, as home appraisals continue to increase.

The cap, first approved in 2004, limits the increase in the city's annual property tax collections to the combined rates of inflation and population growth, or 4.5 percent, whichever is lower. Voters tweaked the cap in 2006, allowing the city to raise an additional $90 million above the cap for public safety spending.

Houston exhausted that breathing room last year, and has had to lower its tax rate annually to avoid exceeding its allowed property tax revenues.

Mayor Annise Parker lamented the $20 million the city was not allowed to collect during its last budget year and the estimated $112 million it will not collect during the current fiscal year, as compared to the cap never having taken effect. Driven largely by rising pension costs and a spike in city debt payments, a $126 million deficit is projected for the budget a new mayor must compile next summer.

"This is a huge problem," Parker said. "When you have the extreme pressures of burgeoning pension costs and caps on revenue - pension costs are going up a whole lot faster than 4.5 percent. It puts the city in even more of a squeeze than we've experienced in the past."

Councilman Dwight Boykins, who represents south Houston, has spoken forcefully in favor of lifting the revenue cap, saying his residents demand services far more than they demand keeping a few extra dollars.

"We have to be able to provide public safety, trash services and improving the quality of life through parks, through infrastructure, and we cannot do it by continuing to go down this path," he said. "This is ridiculous. This revenue cap is hindering and will continue to hinder the future of this city."

Councilman C.O. Bradford disagreed, saying the city will still collect more revenue than it did last year. He said the only way he would support lifting the cap would be for the city to show that it is squeezing the most value out of each dollar it collects today.

"The tax cut today is a good thing, it's a win for the citizens and businesses in the city of Houston," Bradford said. "Businesses, they have options: They can go to Harris County, Pearland, Sugar Land, The Woodlands. We have to keep our policies - which includes fiscal policies - where they are conducive to growth inside our city.

"The city really needs to focus on the delivery of core services," he added. "If we were to do that, we'd see the city has enough money."

Though the tax cut approved Wednesday is citywide, seniors and the disabled have been the largest beneficiaries of the tax rollbacks caused by the revenue cap so far.

In approving Parker's budget last summer, the council doubled the property tax exemption for seniors and the disabled, pushing it to $160,000. By collecting fewer taxes from those residents, the city avoided a larger cut in setting the citywide tax rate on Wednesday.

Most senior homeowners now will pay no property taxes to City Hall, because the median senior homestead is appraised at about $118,000, before the $160,000 exemption is applied. The city estimates about 98,890 households carry a senior or disabled resident exemption.

City property taxes make up only a portion of residents' tax bills. The single largest recipient of many local residents' property taxes is the Houston Independent School District, which raised its tax rate by 3 cents in 2013 and by 1 cent last year.