After the Ad Hoc Committee on Pensions rescheduled its meeting on Thursday for later this month, Dallas officials said in a statement that the City remains on schedule to submit its plan to a state agency for how to fund its pension system for the next 30 years.
“We are making progress, and we all remain committed to ensuring the funding soundness of the [Dallas Police & Fire Pension System] and protecting pension benefits for all City employees and retirees,” Council Member Tennell Atkins (District 8) said in the statement. “We look forward to sharing further updates soon.”
Atkins chairs the Ad Hoc Committee on Pensions. He told The Dallas Morning News that the body is considering reducing its sales tax allocation to Dallas Area Rapid Transit (DART) by 25%.
“It’s just a discussion right now,” Atkins said.
Such a consideration is no secret. The idea was raised last month at a Transportation and Infrastructure Committee meeting, just days after the City’s chief financial officer, Jack Ireland, updated the Ad Hoc Committee on Pensions on the current status of the Dallas Police & Fire Pension System.
“If the City of Dallas decided to withdraw a quarter of a cent sales tax, how would that restructure the debt, and what would be the outcome of the debt?” Atkins asked Nadine Lee, DART’s president and CEO. “And I think that’s very important that we need to know that because right now we’re looking at the budget. We’re looking at the pension fund. We’re looking at every type of revenue.”
Dallas, Plano, Irving, Addison, Carrollton, Cockrell Hill, Farmers Branch, Garland, Richardson, Rowlett, University Park, Glenn Heights, and Highland Park are DART member cities. They relay a 1-cent sales tax to DART, which accounts for about 75% of the agency’s roughly $1 billion budget.
“First of all, every dollar that we collect right now is accounted for in our budget and our financial plan,” Lee told the committee on April 15. “So, any change to the amount of money that we collect would have a devastating effect on what we produce today. And the way I explain this to people is that if you were to ride our system today and have a look around, that is what you’re paying for today.”
Lee told Dallas City Council members on the Transportation and Infrastructure Committee in a May 6 memo that a 25% reduction in sales-tax funding would result in $6 billion less in revenue over 20 years, DMN reported.
“For context, an amount of this magnitude is equivalent to the entire capital budget for bus, light rail, and agency-wide facilities and technology projects for the next 20 years, including mission-critical items like modernizing our nearly 30-year-old light rail system, replacing our aging light rail and bus vehicles, replacing hundreds of bus shelters and benches, and investing in bus corridors to enhance speed and reliability,” Lee said in the memo, per DMN.
Dallas officials are scrambling to resolve a substantial shortfall in the police and fire pension, reported by DMN to be $1 billion. Under a state law approved in 2015 and amended in 2021, that process must include a Funding Soundness Restoration Plan submitted to the Texas Pension Review Board.
Meanwhile, the Dallas Police Department continues to suffer from a significant staffing shortage. The department only has around 3,000 officers in the field. A City report shows Dallas needs roughly 4,000 officers to get police response times where they need to be and properly maintain public safety.
“Right now, we are in a crisis situation, and … we want to know that DART has been a great steward of our money [for] our taxpayers,” Atkins told Lee on April 15. “So, I’m just trying to make sure that you understand, from my position as a chairman of the pension fund, that I’m looking at everything and looking at revenue. And it’d be a shame if I did not ask you that hard question.”
Another Transportation and Infrastructure Committee member, Cara Mendelsohn (District 12), agreed that reducing the sales tax contribution to DART should be considered.
“I think the idea, first of all, is very popular amongst the member cities,” she said. “But [it] would also include encouraging other cities to join in at a reduced rate so that you would actually maintain and perhaps increase revenue [and] provide the kind of mobility options that all of our residents need. Because, as we’re so often reminded, we’re a region, not just a city.”
Meanwhile, as The Dallas Express reported last month, Dallas is at risk of losing majority control of the DART board as the City’s population continues to stagnate amid high crime and homelessness, poor service delivery, and rising tax rates.