The City of Dallas is imposing immediate cost controls after projecting a General Fund shortfall for FY 2025-26.
City officials expect expenses to exceed the budget by $16.4 million, primarily because of Police and Fire pay and overtime. They also expect revenues to fall $3.8 million below budget, mainly because of declining sales tax collections.
The city also expects its self-funded Employee Health Benefit Fund to exceed budget by $13.8 million because of increased medical and pharmacy claims.
The new measures include a selective hiring freeze for non-uniform General Fund positions, restrictions on overtime, spending reductions, and a suspension of non-essential travel for both uniform and non-uniform employees.
“As we navigate resource constraints, fiscal stewardship remains our top priority. We are committed to strengthening efficiency across all operations while ensuring that limited resources are focused on the City’s most critical needs,” Dallas City Manager Kimberly Bizor Tolbert said in the release. “These measures are necessary to maintain essential services and uphold our fiscal responsibility to Dallas residents.”
Budget Pressure And Prop U
Mayor Eric Johnson had challenged council members to cut non-essential spending before the budget vote. He urged them to eliminate wasteful spending and direct savings toward deeper property tax relief.
As previously reported by The Dallas Express, the Dallas City Council approved a $5.2 billion FY 2025-26 budget in September, including $1.9 billion for the General Fund and a $63.1 million increase in public safety funding.
However, that budget still fell short of Proposition U’s mandate to bring the Dallas Police Department to 4,000 officers.
As previously reported by The Dallas Express, Attorney General Ken Paxton sued Dallas in February, alleging the city failed to comply with Proposition U’s police staffing and funding requirements. The lawsuit alleged the city improperly calculated excess revenue and failed to meet charter-mandated public safety funding obligations.
Spending Scrutiny
The new shortfall projection comes after months of scrutiny over city spending priorities.
Mayor Eric Johnson previously called the city’s $5.2 billion budget “bloated” and criticized the council for rejecting several cost-cutting amendments. Councilwoman Cara Mendelsohn also proposed a $4.2 million amendment to raise police and fire pay, but the measure failed, as previously reported by DX.
The city’s travel freeze also follows recent scrutiny over taxpayer-funded travel by Dallas officials. Councilman Adam Bazaldua also traveled to Japan before the FY 2025-26 budget vote, prompting questions about the trip’s cost, transparency, and taxpayer funding, DX reported.
What Counts As Essential
The city defines non-essential spending as purchases or expenses departments can postpone without affecting core operations, legal compliance, public health or safety, or critical services.
Mission-critical work includes activities that must continue to avoid major operational disruptions, legal compliance problems, risks to public health or safety, or failure to deliver key services.
Officials said they will continue monitoring revenues and expenditures and may impose additional cost-containment measures if needed.
