Dallas city officials are facing financial pressures that need to be remedied — and a $38 million budget deficit. Officials say they should have that shortfall figured out by mid-August.
Expenses like remedying the severely underfunded Dallas Police and Fire Pension System, funding public safety meet-and-confer agreements and adding funds to the non-sworn employee retirement fund all play into budget considerations.
“As a result of revenue limits and increased expense pressures, we must take a different approach to this year’s budget,” Interim City Manager Kimberly Tolbert said during Wednesday’s council meeting. “We recognize the challenges ahead and we are committed to the work necessary to provide you with a budget recommendation in August that puts us on a sustainable path forward.”
Jack Ireland, the city’s chief financial officer, said during the Wednesday meeting that officials are trying to work to remedy the funding gap.
“Bottom line…given what we’ve built in at this point we have shortfall of $28 million for fiscal year 25,” Ireland said. “I know for sure that between now and 11 weeks from now, we will be working towards eliminating this $38 million shortfall.”
There's an anticipated gap of $37.3 for fiscal year 2026, $38 million for fiscal year 2027 and $36 million for fiscal year 2028. Ireland said during the meeting that the city is trying to think creatively about how to make up the funding.
“I do believe that the approach is different this year,” Ireland said. “We have pushed back on departments for even bringing forward enhancements.”
Ireland said that any department “enhancements” should already be vetted by an assistant city manager before they’re incorporated into the budget plan. Ireland said the city is also pushing back on department’s reduction options as well.
Along with limiting how departments grow, officials said they’re going to look into partnering with outside groups for different services, focus on quality of positions instead of quantity and review contracts to see how efficient they are.
Tolbert said that includes thinking about incentivizing departments that are able to keep up with city budget expectations.
“We are looking at how do we change and how do we ensure that…department leadership if they are doing the things we need, if they are truly demonstrating outcomes and performance that we need, that we are going to find a way to do that,” Tolbert said.
The budget gap comes at a time when Dallas elected officials and public safety pension executives are trying to come up with a plan to fix the unfunded liabilities. That plan is due in November to state regulators.
Ireland told the council that the budget forecast includes what it would cost to fund the pension through a plan that increases the city's contribution every year for the next five years.
“Which is necessary to reach full funding in thirty years and comply with the [Texas] Pension Review Board,” Ireland said.
Officials agree on most items in the plan. But pension officials want to give current police and fire retirees should get benefits increase.
Recently, city officials found out pension executives told state regulators the system did not need city approval before submitting a plan to fix the fund.
“I was pleased to see a proposed budget that incorporates large contributions to both the employee and uniformed pensions, along with suggestions for a longer-term plan to completely shore it up,” District 1 Council Member Chad West told KERA.
West said it reminds him how it important it is for Dallas’ permitting office, which has been at the forefront of elected officials’ scrutiny for years, to be the “best in the country.”
“The permit office is our gateway to construction jobs, new housing and to the tax revenue we need to close this budget gap while sustaining services,” West said.
By mid-August, city officials plan to brief the council again on how they intend to balance the budget. A plan to fund the public safety pension fund is due in November.
Got a tip? Email Nathan Collins at ncollins@kera.org. You can follow Nathan on Twitter @nathannotforyou.
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