Dallas approves $4.97 billion budget with lower property tax rate, higher residential fees

Dallas residents will have a lower tax rate and higher utility fees after the City Council approved the largest budget in the city’s history on Wednesday.
The unanimously approved $4.97 billion spending plan goes into effect Oct. 1. Several council members praised it for lowering the property tax rate to 70.47 cents per $100 valuation — a 3.1-cent drop, increasing police- and fire-related investments, including a nearly $79 million combined rise in their department budgets, and a series of department reorganizations hoped to improve some city services and save around $7 million.
“This budget is the most responsive that I’ve seen in my five years of being here,” said council member Chad West, who noted the council proposed a little more than half a dozen amendments this year compared to dozens in the past.
But the cost to get there includes an estimated $57 million increase in city revenue through fees projected to be paid by residents and businesses the next fiscal year. The rise is a 41% increase that includes a new $3 monthly charge on water utility bills to pay for cleanups of illegal dumping, homeless encampments, storm debris, dead animals and public right-of-ways.
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Rising property appraisals mean bills will increase despite the highest Dallas property tax rate decrease in at least 40 years.
“We can talk all day about a historic tax decrease,” said council member Cara Mendelsohn, whose proposal to not impose the new $3 environmental cleanup fee failed Wednesday. “But nearly every homeowner in this city will be writing a bigger check than last year, and every renter will feel the impact of another rent increase as their property owner pays more in taxes and the businesses continue to pay more in Dallas than in any of our nearby competing cities.”
Interim City Manager Kimberly Bizor Tolbert noted other challenges are on the horizon.
“While today is an exciting day to achieve final approval of this budget, it’s important to remember that future budgets will be challenging as well due to our ongoing revenue limitations imposed by the state and our commitment to the five-year step-up in contributions to both the Dallas Police and Fire Pension System as well as the Employees’ Retirement Fund,” she told council members Wednesday.
A state law capping property tax revenue was signed by Gov. Greg Abbott in 2019. The law says cities’ year-to-year property tax revenue can’t increase more than 3.5% without voter approval.
More than half of Dallas’ general fund money, which will be $1.9 billion next month and pays for most city services, comes from property tax revenue. The city’s latest total certified property value is $215 billion, up nearly $17 billion from last year.
Federal coronavirus relief money helped boost Dallas’ budget in recent years, but those funds are dwindling.
The city is also committed to increasing its contributions to its two employee pensions to cut into their combined $4 billion funding gap. City leaders plan to increase their contribution to the police and fire pension to more than $202 million from around $185 million. They also plan a more than $14 million increase for the employee retirement fund. The City Council last week approved a plan to spend more than $11.2 billion over the next 30 years to fix the $4 billion shortfall.
This nearly $5 billion budget is a $350 million increase from the one approved last fall. The budget is augmented by $250 million from a $1.25 billion bond program that voters approved in May to pay for several hundred road, park and city infrastructure projects over five years.
Projections from city officials show the average Dallas homeowner without a senior homestead exemption could see a $181 increase to their city property tax bill next year and an estimated $126 rise with the exemption because of rising property appraisals. The city defines the average homeowner as someone with a residence that has a median market value of $381,545.
According to city estimates, the average ratepayer will pay almost $75 more a year for water, stormwater and sanitation services. That doesn’t include the extra $36 a year in a new environmental cleanup fee.
Also on Wednesday, the City Council officially approved putting a portion of more than $500,000 initially planned to continue leasing access to underground downtown tunnels into a reserve fund rather than the entire amount to allow city officials more time to examine the terms of an ongoing 75-year leasing agreement that recently has drawn scrutiny.
The council also approved shifting money in the budget to keep the Skillman Southwestern Library branch open for at least the next 12 months. The northeast Dallas library was initially recommended to be closed due to budget cuts, but community opposition led council member Paula Blackmon, who represents the area, to propose alternative funds to keep the doors open.
Earlier this month, the council signaled support for moving more than $485,000 from an incentive fund to improve infrastructure in under-served areas to the library. But Wednesday, the council approved a revised suggestion from Blackmon to pull almost $457,000 in federal coronavirus relief money earmarked for Blackmon’s district for fentanyl awareness, mental health assistance and home repairs in east Dallas.
The decrease means the library will be open five days a week instead of six. Blackmon said she hopes this will give city officials more time to devise ways to keep the library open beyond next year.
“It’s not about taking from one to give to another,” Blackmon said. “It is really about making sure we all can keep what we have and grow it.”
Chief Financial Officer Jack Ireland said closing the Skillman Southwestern library branch will likely be revisited next year without a dedicated funding source.
“It is not a given that it will be funded in ‘26,” he said.
That branch’s closure had been part of several cuts to the library department. One cut approved with the new budget on Wednesday is for libraries to stop loaning hotspot laptops to help residents with poor internet access. City officials said the program costs $619,920 a year to loan 1,800 devices.
Dallas plans to hire 250 more police officers and 62 firefighters and increase their starting pay to $75,397. Civilian employees’ starting salaries will also rise to $19.25 an hour from $18.50. The city has around 15,000 employees.
The City Council also signed off on combining several departments, a decision officials say will streamline services for residents and others doing business with Dallas.
Changes approved Wednesday include combining the emergency management and integrated public safety solutions offices, the housing department and the community development division, and the public works and transportation departments and giving that new office regulation oversight of taxis, limousines, rideshares, horse-drawn carriages and other transportation-for-hire businesses. The aviation department previously oversaw enforcement.
They join other previously announced department changes like merging the offices that regulate planning and zoning as well as the offices that house 311 and communications, marketing and outreach.