Dallas city leaders predict they'll be short about $36.5 million dollars this budget cycle, due in large part to declining property and sales tax revenues and a costly new police hiring mandate.
That shortfall's estimated to grow to $82.9 million by 2027 if the budget isn't adjusted.
Some of the main stressors on the city's finances are capped property tax revenue and slow sales tax growth.
State law caps property tax revenue growth at 3.5% annually despite rising property values. Last month, city officials also told the council property tax collections dropped by $6.5 million dollars from successfully disputed property appraisals. That's grown to $13 million according to the city's latest forecast.
Sales tax revenue has also been lower than the city expected, with fiscal year 2025 projected to be $4.7 million below budget. The drop comes amid market uncertainty as the Trump administration's tariff policies have led some consumers to pull back on spending. According to a Tuesday report from the U.S. Commerce Department, sales at retail stores and restaurants dropped 0.9% in May.
Expenses are also expected to increase because of prior commitments, like pension contributions, minimum wage increases, employee and retiree health benefits, and a new hiring mandate for police officers.
The city plans to hire 900 more police officers in the next few years to meet the requirements of Proposition U. Dallas voters passed the charter amendment last November, requiring the city to have at least 4,000 sworn officers and to put 50% of all new revenue towards police and fire pensions.
Dallas police officials have previously expressed a desire to hire more officers, with a goal of 350 more in the next fiscal year and 400 after that. But council members have warned it could be too costly — each new hire adds more costs in salaries, pensions, and benefits.
The city also faces a debt problem, with Council member Cara Mendelsohn pointing out at Wednesday’s city council meeting more than a quarter of its revenue goes toward paying its debt service.
“We keep issuing more debt over and over and over again,” she said. “And if we would pay as we go, we would have a whole lot more money to actually accomplish the things we want to.”
Meanwhile, council member Paul Ridley said the city should spend less on consultants to help balance the budget.
“We spend an inordinate amount of money for consultants, both on an individual project basis and the total number of projects that we employ consultants,” Ridley said. “So that we can utilize, better utilize, our own staff resources for some of those projects. I think that could result in some significant savings.”
Penelope Rivera is KERA’s breaking news reporter. Got a tip? Email privera@kera.org.
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