For even the most civically minded, a Dallas City Council budget briefing tends to be dry at best.\u00a0<\/p>\n
Sometimes there is a bit of squabbling as representatives bicker over funding bike lanes instead of playground shades or IT upgrades. Still, for the most part, it\u2019s a slog to get through the 100-slide presentations from city officials who actually understand what the word inflation means.<\/a> (And not just in that general, \u201cMan, have you checked out the price of beef lately?\u201d way.)\u00a0<\/p>\n Whether you\u2019re reading between the lines or not, it is clear that Dallas has a budget problem \u2014 to the tune of about $34 million. We haven\u2019t quite gone over budget yet, city officials told the council on Wednesday, but it\u2019s projected to happen by the end of the fiscal year in September.\u00a0<\/p>\n To address the budget deficit, Dallas City Manager Kimberly Bizor Tolbert has announced a hiring freeze (which does not affect the police or fire departments) and has halted travel, major departmental purchases and overtime for non-uniformed city workers. That may be enough to help Dallas get out of the red by the fiscal year\u2019s end, but it\u2019s a Band-Aid.\u00a0 <\/p>\n Sign up for the News newsletter to get the latest stories delivered to your inbox<\/p>\n THANK YOU!<\/p>\n You’re all set.<\/p>\n CLOSE\t\t\t\t\t\t<\/p>\n The mayor won\u2019t put off his luxury trips forever,<\/a> and before long, some department is going to need a new and flashy and expensive toy.\u00a0 <\/p>\n What Is Causing Dallas\u2019 Deficit?<\/p>\n We know what you\u2019re thinking: \u201cIsn\u2019t this year\u2019s budget the largest in Dallas\u2019 history,<\/a> at $5.2 billion? Why are we pinching pennies?\u201d There are three main stressors on the current budget that are forcing Dallas to slim down, one of which is funnier than the other two, so we\u2019ll start with it.\u00a0<\/p>\n The city pays for employee health insurance<\/a> and, in recent years, it has found itself on the hook for rising pharmacy costs and utilization. This year, health benefits will cost Dallas $13.8 million more than was budgeted, and Chief Financial Officer Jack Ireland suggested on Wednesday that the rise of GLP-1s, like Ozempic or Wegovy, is particularly to blame.\u00a0<\/p>\n We\u2019ll pause here so you can make a few jokes about how Ozempic is forcing the city to slim down.\u00a0<\/p>\n Other general fund expenditures are $16.4 million over budget, with police and fire overtime accounting for the largest portion. Park and Recreation and Dallas Animal Services\u2019 needs have also contributed to the expense, but nowhere near the level of our public safety departments.\u00a0<\/p>\n And to wrap us up, sales tax revenue isn\u2019t growing at the speed city officials planned for, and is forecast to come in $3.8 million short. <\/a>(The actual deficit is $6.1 million, but a few advantageous reimbursements to the city have helped offset some of that loss.)<\/p>\n The general volatility of sales taxes as a revenue source is problematic for Dallas. Twenty-four percent of Dallas\u2019 general fund revenue comes from sales tax, but after a period of significant growth following fiscal year 2020, the trend has begun to slow. The budget for this year assumed that sales tax would grow by 4.6% from last year, but instead it has grown by only 3.3%.\u00a0<\/p>\n So there\u2019s still growth, but not to the extent that city officials planned, and spent, for.\u00a0<\/p>\n Ongoing Challenges<\/p>\n Fair warning: property taxes aren\u2019t sexy, but they are important. We\u2019ll get through this part as fast as we can.<\/p>\n Property taxes make up 58% of Dallas\u2019 general fund revenue. Though property values are growing at a pace <\/a>that would make a millennial hoping to buy a home break down in tears, Dallas is also lowering the tax rate. In fact, they\u2019ve done so for 10 consecutive years. Since fiscal year 2023 alone, the city has forgoen more than $100 million in revenue to reduce the tax burden on homeowners. We also have generous property tax exemptions that amount to $437.4 million in revenue foregone.\u00a0<\/p>\n This is objectively good for Dallas residents, and we aren\u2019t saying it\u2019s not. But as mentioned in a separate briefing on the city\u2019s debt liabilities, nearly a third of the revenue from property taxes automatically goes toward paying off Dallas\u2019 debts. (This is debt taken on through bond programs,<\/a> which are voter approved and pay for things like parks and street repairs.) This means that Dallas is in a cycle similar to that of a 24-year-old who just got a credit card for the first time and realized that paying it off would take a chunk out of his paycheck. We\u2019ve all been there.\u00a0<\/p>\n Even if Dallas wanted to start bringing in some of that forgone property tax revenue, the state limits that growth to 3.5% a year, and city officials believe that cap may be further lowered in next year\u2019s legislative session.<\/p>\n The city budget is also under tremendous strain due to its obligations to the police department. Pension obligations have been a point of tension for years, nearing crisis levels before city officials finally began to figure out what to do. (That\u2019s a whole other dummy\u2019s article.) Additionally, voters in 2024 approved a city charter amendment <\/a>that funnels revenue toward the police department and demands higher salaries and increased hiring. All of that comes with a price tag, and the city has no choice but to comply.\u00a0<\/p>\n Finally is a problem diagnosed by Council member Cara Mendelsohn, who said on Wednesday that Dallas has \u201can incredible problem with spending.\u201d\u00a0<\/p>\n Priorities, Priorities\u00a0<\/p>\n As that 24-year-old with a credit card knows, spending money is easy. Slowing down is much harder.\u00a0<\/p>\n Preparing for the budget season, city staff sent council members a survey to gauge priorities and where cuts might make sense. Several representatives criticized the survey as flawed, but what it did reveal is that everyone at the horseshoe wants something different, and no one is comfortable with cuts.\u00a0<\/p>\n