When the user is editing an existing Catalog Item and saving, the system is deleting the existing Catalog value from the item and adding the "General Services" value to the Catalog section. If an Insert and Stay is performed, it adds the "General services" Catalog value and the existing catalog remains.
It was found, when debugging Business Rules, that there was a "wf_executing" Set Values workflow activity called "Set Catalog to General Services". The workflow containing the Set Values activity was running on the sc_cat_item table, which is why we were seeing the issue occurring on Catalog Items (as that this the table where Catalog Items are stored).
The behavior was completely resolved when the user removed the Set Values workflow activity from the workflow running on sc_cat_item.