The City of Dallas is projected to spend more money than it brings in by 2026, leaving the door open for further tax hikes on residents.
The proposed budget for the upcoming fiscal year notes in its five-year forecast that the City’s general fund will likely be out of structural balance by fiscal year 2026. However, the City insisted it will adopt a balanced budget when the time comes, but when asked how it plans to do so, it did not offer a specific plan.
“Based on our current conservative future revenue forecast, we have indicated that expenses might outpace revenue in years three through five,” a City spokesperson told The Dallas Express. “Before we develop a recommended budget for those future years (FY26, FY27, FY28), all revenues and expenses will be updated, and a balanced budget will be recommended to the City Council.”
James Quintero, a policy director at the Texas Public Policy Foundation, said Dallas faces serious budgetary issues that the City Council is failing to address in advance.
“The problem is governments generally don’t think long term — there are issues here in Dallas that need to be dealt with,” Quintero told The Dallas Express. “Unfortunately, politicians don’t think about how to get through [more than] the next fiscal year. I don’t know how they plan to fix the budget, and they certainly don’t know either.”
Council members debated whether to raise the property tax rate ceiling on Wednesday, even as property values continue to rise across the region. Council Member Cara Mendelsohn proposed a “no new revenue” rate with a ceiling of $0.6813 per $100 valuation. Her proposal was rejected in a 10-4 vote.
The City Council instead passed the higher property tax ceiling recommended by City Manager T.C. Broadnax ($0.7358 per $100 valuation), as reported by The Dallas Express. Mayor Eric Johnson came out in opposition to Broadnax’s plan.
“This property tax situation that we’re in … [is] an iceberg,” Johnson said. “We can’t continue to tax people the way we’ve been taxing them and think they’re going to stay — think they’re going to continue to choose Dallas to live and have their businesses here.”
If adopted, Mendelsohn’s proposal of a “no new revenue” property tax rate would require the City to spend $123.6 million less, according to City CFO Jack Ireland, as reported by The Dallas Express.
Quintero said Dallas’ budget struggles are similar to those of many cities across the nation. He said one driving factor has been the flow of federal taxpayer money to cities spurred by the COVID-19 pandemic, which has allowed city leaders to keep pushing fiscal concerns into the future.
“We’re in a position where cities have to figure out how to cope with a huge amount of federal stimulus going away,” Quintero told The Dallas Express. “I fear a lot of cities will go with the notion that they have to raise taxes.”