The Dallas Examiner
Dallas’ new mayor, Eric Johnson, and the Dallas City Council heard a briefing on the Fiscal Year 2019-2020 and Fiscal Year 2020-2021 budget overview presented by Chief Financial Officer Elizabeth Reich and the Office of Budget during the council meeting on June 18. It was the first briefing for the new council year.
City Manager T.C. Broadnax recommened presenting a balanced biennial budget to the City Council on Aug. 13.
Although the general fund for the Fiscal Year 2020 planned year was balanced when presented, a City Council amendment to increase police and fire pay resulted in a structural imbalance of $5.3 million. Also, that gap is forecasted to increase to $33.7 million in FY21, $36.6 million in FY22 and up to $44 million in FY23, due also to recent state legislation passed.
The topics the City Council will give priority to in upcoming budget talks in the next two months include housing and affordable and mixed-income housing development programs to improve the city’s housing stock, parks and recreation and youth activities, and grocery store strategy to eliminate food deserts in Southern Dallas.
Recent surveys the city conducted also show that residents’ top priorities for the budget are infrastructure maintenance, police services and code enforcement.
“The purpose of the biennial budget is to ensure sustainability,” Reich said. “We want to make sure those things we are recommending to you are sustainable in the next year and we don’t want you to make a decision to fund a program or initiative if we know that we are not going to be able to afford it in the next year.”
Reich presented factors that may affect the general revenue fund, one of which is the 65/Older or Disabled Property Tax Exemption. The property tax exemptions reduce a property owner’s liability but also reduce revenues that come to the city to support services.
On June 12, the City Council voted to approve an increase in this exemption from $90,000 to $100,000, which resulted in a projected revenue loss of $3.4 million for the city.
“The budget development for FY20 and future years must consider two significant factors affecting the general fund revenues, and that is the economic condition and state legislation,” Reich said. “The two largest revenues that will be impacted are the property taxes and sales tax.”
For FY19, the City Council adopted a $3.6 billion budget.
“We are starting on a little bit of a deficit because although we presented a balanced budget last year through the City Council amendment process, the City Council made the decision to fund additional public safety spending to raise the starting salaries to $60,000 and provide a 3% raise for all others,” Reich said. “That took the budget out of balance for the current year, so our budget for FY20 that we are starting out with this year is there is a gap of $5.3 million.”
Another area that will affect the general fund is recent legislation passed by the Texas Legislature such as SB2, known as the Texas Property Tax Reform and Transparency Act of 2019. This legislation will cap the city’s ability to grow property tax revenue at 3.5% instead of 8% without seeking voter approval and only applies to reappraisals for the general fund. It also continues to exclude revenue needed to pay voter approved debt and the growth from new construction does not count against the cap.
Exceeding the 3.5% cap is allowed, but requires an election on the November uniform election date.
Also, other legislative changes include HB1525 and HB2153. Starting on Oct. 1, out-of-state internet retailers with at least $500,000 in Texas sales in the prior 12 months will be required to collect and remit local sales and use taxes.
Furthermore, another legislative change that is determined to impact the city’s general fund revenue is legislative change SB1152. In this legislation, companies that provide both telecommunications and cable TV services are exempt from paying the lesser of telecommunications right-of-way fees and cable TV franchise fees .
All cable TV providers currently serving Dallas also provide telecommunications services and pay both fees.
Based on SB1152, Time Warner Cable/ Spectrum and Grande Communications may be exempt from telecommunications right of way fees, and AT&T and Frontier Communications/Verizon may be exempt from cable TV franchise fees.
This new legislation takes effect on Jan.1, 2020, and will reduce revenue for both years of the upcoming biennial budget. In FY20, the total decrease will be $6.6 million, and the decrease will be $9 million in FY21.
Another major legislative change is HB1631. This law went into effect on June 1 and states that the city will no longer operate its red-light camera program or issue citations for violations based on a photographic enforcement system.
“This legislative change will reduce revenue for FY19 by $1 million and there will be a $2.4 million net decrease for FY20,” Reich said. “It will be a decrease of $7.5 million in revenue and $5.1 million in expenses.
Factors that may impact the general fund expenses align to six strategic priorities, which include public safety; mobility solutions, infrastructure and sustainability; economic and neighborhood vitality; human and social needs; quality of life; and government performance and financial management.
Town hall meetings to discuss the upcoming budget will take place in August.
Council member Carolyn King Arnold of District 4 reiterated the fact that despite budget deficits, public safety needs to be a top priority.
“We need to be the council that goes on record to having fought for public safety,” Arnold said. “So we are not continuing to play this game of which cup are you going to find this money. We cannot do without public safety. We need to do what we know we can do, and we need to find this money and cannot go to these town hall meetings and continuing to feed that, ‘Oh, we are down 700 officers.’ I had a constituent tell me she does not want to hear that. She wants an answer to the question, ‘What are we going to do and how we are going to address public safety in this city?’”