The city of Dallas just raised everyone’s taxes.
Despite growing angst over affordability, a majority of Dallas city councilmembers voted last week to increase the tax burden on working families by adopting a tax rate of $0.7357 per $100 of value. By setting the tax rate at this level, City Hall chose to go well beyond the no-new-revenue tax rate of $0.681936 per $100 and embrace one of, if not, the highest tax rate in North Texas.
And because of their decision, Dallas residents will soon pay more.
Early estimates suggest that the average homeowner’s tax bill will rise from $2,140 this year to $2,286 next year. That’s a nearly 7% jump in the city’s tax burden and it comes at a difficult time.
New data from the U.S. Census Bureau suggests that: “Median income in Dallas-Fort Worth dropped nearly 1% between 2019 and 2022.” In dollar terms, the median income in DFW dropped from $83,537 in 2019 to $82,823 in 2022. What this means is that most people’s budgets aren’t growing, even if the city’s budget is.
Making matters worse, Dallas’ population is in decline. From 2019 to 2022, the number of people residing within the city fell from 1,301,970 to 1,300,239, according to the latest available Comprehensive Annual Financial Report (CAFR). That’s a drop of 0.13% which, while small, means that fewer people are having to bear more of the cost of city government. If this trend continues, it could create something of a cascade effect that makes the situation progressively worse.
All of this raises a question: Why is City Hall raising taxes when people are struggling and fewer folks are being served?
One likely answer—they enjoy spending Other People’s Money.
With the exception of Mayor Eric Johnson, Councilmember Cara Mendelsohn, and a few others, a supermajority of city council voted to support the recent tax hike—and they had to because it was needed to pay for the massive new $4.6 billion budget. That is to say, the higher taxes made possible all the extra government spending.
And boy, is there a lot of new spending.
In total, the city’s 2024 budget spends nearly $1 billion more than in 2020. That’s an incredible expenditure increase considering its population shrinkage. On a per capita basis, the new budget appropriates about $3,500 per resident, up from around $2,800 per person in 2020.
So is all this government spending even needed? The short answer is no.
During Wednesday’s public hearing, a few councilmembers voiced concern over particular departments’ spending habits, with some being accused of growing their budgets by 50% or more over the last five years. After looking at the city’s own figures, those councilmembers are right to be alarmed.
A review of General Fund expenditure growth from fiscal years 2020 and 2024 reveals that at least 14 different divisions have ballooning budgets. Some departments, like Code Compliance (+64%) and Building Services (+60%), are perhaps more defensible than others, like Data Analytics & Business Intelligence (+384%) and Management Services’ Office of Equity and Inclusion (+704%); but all are growing fast and it’s creating hardship for taxpayers.
So what are people to do with all of this information?
Well, it’s unfortunately too late to stop this year’s tax hike and spending spree, but it’s not too early to get engaged in next year’s planning process. In just a few months, local elected officials, in Dallas and elsewhere, will begin their fiscal processes anew and they need to be reminded of the importance of fiscal discipline and how to pursue it with tools like zero-based budgeting, third-party efficiency audits, competitive contracting, and others.
Once learned, officials must then be encouraged to use these tools. Only by using these tools can we expect to control spending. Hoping the status quo changes on its own isn’t working. Once fiscal discipline has been restored, then everything else, like tax rates, will fall into place.
So let’s get to work, Dallas taxpayers. There’s no time to waste.