The city of Dallas’ credit outlook has worsened from “stable to negative,” according to a memo released on Friday. City officials cited a new report from Moody’s Investor Service that listed a controversial city charter amendment as one of the reasons for the change in status.
The newly passed amendment — Proposition U — requires the city to hire hundreds more police officers. While the measures’ advocates said the move will strengthen the police department, elected officials have warned it could cost the city millions to pull off.
The city memo said Moody’s report cited other financial issues as well including “required increases to [the city’s] pension plans” and increased police expenses.
“The revised credit outlook is not a rating downgrade, it is an indication of an expected direction of the credit rating’s movement to be reviewed over the next 18-24 months,” Interim City Manager Kimberly Bizor Tolbert said in the memo to council members. “As a reminder, City Charter amendments do not take effect until after the City Council by resolution enters an order declaring that the amendments have been adopted.”
If the city's rating goes down, it could increase the cost of interest on municipal debt.
The credit change is only the first of what are likely many effects of the new charter amendment to come.
Proposition U was placed on the ballot by a group named Dallas HERO. The organization originally placed three propositions on the ballot. Along with Prop U, Prop S was also approved on election night.
That amendment allows any resident or business entity in Dallas to sue the city for violating the charter, ordinances, or state laws.
Pete Marocco is the executive director of Dallas HERO. Marocco, and his Dallas HERO group, have gained significant scrutiny over their efforts to get their amendments passed on election night. That includes questions into the group’s funders, who ran its campaign — and what their ultimate goal was.
The day before the election, D Magazine reported Marocco had been accused of entering the U.S. Capitol during the Jan 6, 2021 insurrection. Marocco denied those claims in a statement to the magazine.
Monty Bennett, a local hotel mogul, is one of the group’s only public donors, except for Marocco.
Bennett, who also serves as the publisher of the Dallas Express, has been accused of using the publication to discredit other media organizations — and promote his own interests, according to a sweeping investigation into the HERO movement published in the Texas Observer.
The group created enough commotion that a coalition of former and current elected city, county and state officials came together to oppose the propositions. That includes four former Dallas mayors, current Mayor Eric Johnson and the entire city council.
“This is not taking a sledgehammer to the way we do business,” former Dallas Mayor Ron Kirk said during an early-October press conference opposing the items. “This is rolling a hand grenade into City Hall and destroying it.”
Members of the opposition told KERA before election day at least one of the measures could be approved. Proposition U passed by a slim margin.
Tolbert’s memo said the city had already budgeted for financial hurdles like the pension obligations, but said members of the city staff were “continuing to evaluate the financial impact of Proposition U." The city council is slated to vote on a resolution officially adopting the charter amendments on Nov. 19.
Got a tip? Email Nathan Collins at ncollins@kera.org. You can follow Nathan on Twitter @nathannotforyou.
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