The city of Dallas is $5 million behind its projected sales tax revenue in the first four months of the fiscal year.
Dallas primarily gets its revenue through two ways: property and sales tax. Sales tax makes up 24% of the city's revenue.
Chief Financial Officer Jack Ireland presented a budget briefing for the City Council earlier this week. During the briefing, he attributed the lower sales tax revenue to inflation, high energy prices, and a weak labor market.
"And that will impact our sales tax," Ireland said, "As there's a weaker consumer confidence, there's less money being put into the economy, and we will see a slowdown."
The 2026 fiscal year was expected to see sales tax grow by 4.6%, Ireland said. That forecast has now been lowered to 3.3%. Next year's budget could also see lower projected sales tax growth based on this year's revisions.
Low sales tax growth is not unique to Dallas — Ireland said cities across the state are experiencing a downward turn in their sales tax this year.
Revenue discussions are happening as the city prepares for the next budget season. While staff will present the budget for 2027 in August, City Council members are already having town halls and asking for resident feedback on how they want their tax dollars prioritized.
Council members will also be polled on district specific budget priorities, with responses due by April 17.
Discussions about consumer spending in Dallas came after the council was briefed on housing costs in the city.
Council Member Gay Donnell Willis said during the briefing that about a third of Dallas employees live in the city, meaning their wages contribute to other cities.
Some major cities like New York City, Boston, Chicago, and Philadelphia requires municipal employees to live in the city that employees them. This is prohibited in Texas by the state's local government code.
"But that's even more incentive to have affordable housing in the city of Dallas so that they can [live in the city], because we can't legally do it," Willis said.
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