diff --git a/packages/common/src/services/decision/createProposal.ts b/packages/common/src/services/decision/createProposal.ts
index 4119c5ac5..01647166d 100644
--- a/packages/common/src/services/decision/createProposal.ts
+++ b/packages/common/src/services/decision/createProposal.ts
@@ -9,7 +9,6 @@ import {
   proposalAttachments,
   proposalCategories,
   proposals,
-  taxonomyTerms,
 } from '@op/db/schema';
 import type { User } from '@op/supabase/lib';
 import { assertAccess, permission } from 'access-zones';
@@ -26,6 +25,7 @@ import { generateUniqueProfileSlug } from '../profile/utils';
 import { processProposalContent } from './proposalContentProcessor';
 import type { ProposalDataInput } from './proposalDataSchema';
 import type { DecisionInstanceData } from './schemas/instanceData';
+import { ensureProposalTaxonomyTerm } from './utils/ensureProposalTaxonomyTerm';
 import { checkProposalsAllowed } from './utils/proposal';
 
 export interface CreateProposalInput {
@@ -85,33 +85,9 @@ export const createProposal = async ({
     // Extract title from proposal data
     const proposalTitle = extractTitleFromProposalData(data.proposalData);
 
-    // Pre-fetch category term if specified to avoid lookup inside transaction
+    // Ensure category taxonomy term exists (creates if missing)
     const categoryLabel = (data.proposalData as any)?.category;
-    let categoryTermId: string | null = null;
-
-    if (categoryLabel?.trim()) {
-      try {
-        const taxonomyTerm = await db._query.taxonomyTerms.findFirst({
-          where: eq(taxonomyTerms.label, categoryLabel.trim()),
-          with: {
-            taxonomy: true,
-          },
-        });
-
-        if (taxonomyTerm && taxonomyTerm.taxonomy?.name === 'proposal') {
-          categoryTermId = taxonomyTerm.id;
-        } else {
-          console.warn(
-            `No valid proposal taxonomy term found for category: ${categoryLabel}`,
-          );
-        }
-      } catch (error) {
-        console.warn(
-          'Error fetching category term, proceeding without category:',
-          error,
-        );
-      }
-    }
+    const categoryTermId = await ensureProposalTaxonomyTerm(categoryLabel);
 
     const profileId = await getCurrentProfileId(authUserId);
     const proposal = await db.transaction(async (tx) => {
diff --git a/packages/common/src/services/decision/updateProposal.ts b/packages/common/src/services/decision/updateProposal.ts
index 016aa987b..e8907d94a 100644
--- a/packages/common/src/services/decision/updateProposal.ts
+++ b/packages/common/src/services/decision/updateProposal.ts
@@ -8,8 +8,6 @@ import {
   processInstances,
   proposalCategories,
   proposals,
-  taxonomies,
-  taxonomyTerms,
 } from '@op/db/schema';
 import { User } from '@op/supabase/lib';
 import { checkPermission, permission } from 'access-zones';
@@ -24,6 +22,7 @@ import { getOrgAccessUser } from '../access';
 import { assertUserByAuthId } from '../assert';
 import type { ProposalDataInput } from './proposalDataSchema';
 import { schemaValidator } from './schemaValidator';
+import { ensureProposalTaxonomyTerm } from './utils/ensureProposalTaxonomyTerm';
 
 type ProcessInstanceWithProcess = ProcessInstance & {
   process: DecisionProcess;
@@ -42,34 +41,16 @@ async function updateProposalCategoryLink(
       .delete(proposalCategories)
       .where(eq(proposalCategories.proposalId, proposalId));
 
-    // Add new category link if provided
-    if (newCategoryLabel?.trim()) {
-      // Find the "proposal" taxonomy
-      const proposalTaxonomy = await db._query.taxonomies.findFirst({
-        where: eq(taxonomies.name, 'proposal'),
-      });
-
-      if (!proposalTaxonomy) {
-        console.warn('No "proposal" taxonomy found, skipping category linking');
-        return;
-      }
+    // Add new category link if provided (creates term if missing)
+    const categoryTermId = await ensureProposalTaxonomyTerm(
+      newCategoryLabel ?? '',
+    );
 
-      // Find the taxonomy term that matches the category label
-      const taxonomyTerm = await db._query.taxonomyTerms.findFirst({
-        where: eq(taxonomyTerms.label, newCategoryLabel.trim()),
+    if (categoryTermId) {
+      await db.insert(proposalCategories).values({
+        proposalId,
+        taxonomyTermId: categoryTermId,
       });
-
-      if (taxonomyTerm) {
-        // Create the new link
-        await db.insert(proposalCategories).values({
-          proposalId,
-          taxonomyTermId: taxonomyTerm.id,
-        });
-      } else {
-        console.warn(
-          `No taxonomy term found for category: ${newCategoryLabel}`,
-        );
-      }
     }
   } catch (error) {
     console.error('Error updating proposal category link:', error);
diff --git a/packages/common/src/services/decision/utils/ensureProposalTaxonomyTerm.ts b/packages/common/src/services/decision/utils/ensureProposalTaxonomyTerm.ts
new file mode 100644
index 000000000..76f3bdf02
--- /dev/null
+++ b/packages/common/src/services/decision/utils/ensureProposalTaxonomyTerm.ts
@@ -0,0 +1,77 @@
+import { db, eq } from '@op/db/client';
+import { taxonomies, taxonomyTerms } from '@op/db/schema';
+
+import { CommonError } from '../../../utils';
+
+/**
+ * Finds or creates a taxonomy term for a proposal category.
+ * Ensures the "proposal" taxonomy exists, then looks up the term by label.
+ * If the term doesn't exist, creates it with a normalized URI.
+ *
+ * Returns the taxonomyTermId, or null if the label is empty/whitespace.
+ */
+export async function ensureProposalTaxonomyTerm(
+  categoryLabel: string,
+): Promise<string | null> {
+  const trimmed = categoryLabel?.trim();
+  if (!trimmed) {
+    return null;
+  }
+
+  // Ensure "proposal" taxonomy exists
+  let proposalTaxonomy = await db._query.taxonomies.findFirst({
+    where: eq(taxonomies.name, 'proposal'),
+  });
+
+  if (!proposalTaxonomy) {
+    const [newTaxonomy] = await db
+      .insert(taxonomies)
+      .values({
+        name: 'proposal',
+        description:
+          'Categories for organizing proposals in decision-making processes',
+      })
+      .returning();
+
+    if (!newTaxonomy) {
+      throw new CommonError('Failed to create proposal taxonomy');
+    }
+    proposalTaxonomy = newTaxonomy;
+  }
+
+  // Look up existing term by label within the proposal taxonomy
+  const existingTerm = await db._query.taxonomyTerms.findFirst({
+    where: eq(taxonomyTerms.label, trimmed),
+    with: {
+      taxonomy: true,
+    },
+  });
+
+  if (existingTerm && existingTerm.taxonomy?.name === 'proposal') {
+    return existingTerm.id;
+  }
+
+  // Create a new term
+  const termUri = trimmed
+    .toLowerCase()
+    .replace(/\s+/g, '-')
+    .replace(/[^a-z0-9-]/g, '');
+
+  const [newTerm] = await db
+    .insert(taxonomyTerms)
+    .values({
+      taxonomyId: proposalTaxonomy.id,
+      termUri,
+      label: trimmed,
+      definition: `Category for ${trimmed} proposals`,
+    })
+    .returning();
+
+  if (!newTerm) {
+    throw new CommonError(
+      `Failed to create taxonomy term for category: ${trimmed}`,
+    );
+  }
+
+  return newTerm.id;
+}