Mayor Eric Johnson and Council Member Cara Mendelsohn are leading the charge to prevent an increase in Dallas citizens’ property taxes and rein in City spending in order to avoid what they say is an imminent financial disaster.
The majority of their colleagues did not support their efforts on Wednesday, however, and the council voted against Mendelsohn’s proposal to lower the proposed FY 2023-24 tax ceiling to $0.6813 per $100 valuation, as previously reported by The Dallas Express. The only other council members to vote against adopting the $0.7358 tax ceiling recommended by City Manager T.C. Broadnax were Council Members Gay Donnell Willis and Kathy Stewart.
Mayor Johnson said Mendelsohn’s motion to set a property tax rate ceiling of $0.6813 was the only one put forth Wednesday that would correct the City’s financial trajectory.
He compared the City of Dallas to the Titanic, explaining that City leaders must “turn the ship around” before it is too late.
“This property tax situation that we’re in … [is] an iceberg,” he 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.”
Johnson noted that residents and businesses can move to surrounding areas of North Texas “to get a better deal on their taxes” and said he believes Mendelsohn’s plan is the only one that “represents turning the ship around and going in the other direction.”
“I’m going to support turning the ship around for the residents of Dallas and the taxpayers of the City,” he said.
Wednesday’s vote adopted a property tax rate ceiling, not the tax rate itself. The tax rate will not be finalized until the council adopts the FY2023-24 budget on September 20.
“We aren’t voting on the rate today … but what I would love to see us do is guarantee through our actions today that no matter what decisions are made through this process, the ship is turned around,” said Johnson. “The only way we do that is to adopt at least the no-new-revenue rate.”
The rest of the council was not persuaded by Johnson’s arguments and voted to adopt the higher property tax rate ceiling recommended by City Manager T.C. Broadnax.
As previously reported by The Dallas Express, Council Member Mendelsohn’s suggested “no-new-revenue” property tax rate would require the City to spend $123.6 million less than Broadnax has proposed, according to CFO Jack Ireland.
During Wednesday’s meeting, Mendelsohn explained that adopting a tax rate any higher than this would result in tax increases. While Broadnax’s recommendation includes a slight reduction in the property tax rate from the previous fiscal year, this rate change is outweighed by skyrocketing property value appraisals in Dallas.
The net result of Broadnax’s plan would be an overall tax increase on Dallas citizens.
Mendelsohn noted that Dallas has the highest five-year property tax increase of any major U.S. city, as previously covered by The Dallas Express.
“We say, ‘We’re lowering your tax rate!’ and then we take a bow, but the residents get a higher tax bill because their property value has increased significantly,” she said. “The only way to reduce taxes is to reduce our expenses and to vote a tax rate the same level that the appraisal district has increased the values.”
“This year, appraisals have come in 10.5% higher, so to actually reduce taxes, you’d have to adopt a tax rate 5.8 cents lower than what the City Manager is proposing,” she continued. “If you adopt the tax rate with the proposed 0.65 cent reduction … or a one-cent or a two-cent reduction, those are quite simply tax increases.”
Furthermore, Mendelsohn noted that when she and many of her colleagues were first elected in 2019, the City of Dallas had a budget of $3.6 billion. City Manager T.C. Broadnax’s recommended budget for FY23-24 would cost Dallas taxpayers $4.6 billion — a full $1 billion increase over four years.
“To our Dallas residents and to our businesses, I want to say, ‘Thanks a billion,'” she said. “But have you had enough?”
Dallas stakeholders spoke in support of Mendelsohn’s plan during Wednesday’s meeting, including Louis Darrouzet, CEO of the Metroplex Civic and Business Association.
“I stand before you today asking you to strongly consider Council Member Mendelsohn’s no-new-revenue proposal for the fiscal year 2023-2024 budget,” Darrouzet told the council. “We’re at a critical juncture in the history of this city.”
He noted that Dallas’ population has decreased by 3.36% over the last three years while the City’s property tax revenue increased by 35%, or $360 million, during that time.
Darrouzet said many of the MCBA’s 120 member companies, employing nearly 10,000 residents, have discussed leaving Dallas and moving to the suburbs because of the City’s high taxes.
While the population of the Dallas-Fort Worth metroplex has exploded in recent years, the City of Dallas proper has continued to lose businesses and residents due to not only high taxes but also crime and homelessness, as previously covered by The Dallas Express.