The city of Dallas is going to ask voters to pass a bond package of $1.25 billion. Even this much money does not come close to covering the city’s need. Sadly, no money has been earmarked to address the $28 million needed to repair City Hall. Most alarming, it fails to address the pension problem that threatens Dallas.

Voters will have to decide if now is the time to borrow that much money. Dallas has a huge inventory of needs, but voters will have to ask: Is it prudent to borrow more money when we are already in such debt?

A just-released study on the fiscal health of American cities by the Truth in Accounting think tank provides a stark appraisal of Dallas’ fiduciary situation. The city earned a grade of “D.” That’s not the kind of Big D we want. Dallas finished worst among cities in Texas and among the bottom 10 of American cities overall.

Truth in Accounting was founded in 2002 by Sheila Weinberg, a practicing CPA with more than 40 years’ experience. The organization is “dedicated to educating and empowering citizens with understandable, reliable, and transparent government financial information.”

Each year Weinberg’s group studies the top 75 cities in the country and grades their fiscal responsibility. The study also attaches the dollar amount that would be required by every taxpayer to cover the city’s debts. This year Dallas finished 63rd out of the 75 cities, but improved from the previous year. By contrast, Washington, D.C., finished first and had a surplus of $2.8 billion, creating a surplus per taxpayer of $10,700.

Times have been good for Dallas. There has been Federal COVID-19 relief money, a huge sales tax boom and rapidly rising property appraisals. But somehow the city of Dallas still has a tax burden of $9,600 per resident, according to the Truth in Accounting study.

Even worse, Truth in Accounting reported, “The pension debt included in this report and the city’s financial report is based using 2021 data when pension investments were performing well. If the city’s pension investments experienced the same major decrease that most other cities experienced in 2022, Dallas’ pension debt would be higher. … Dallas had set aside only 61 cents for every dollar of promised pension benefits and no money set aside for promised retiree health care benefits.”

Underfunded municipal retirement programs are a risk to the U.S. economy. “Cities should focus on overfunding their retirement plans so they can weather market downturns,” Weinberg said in a press release. “If elected officials choose to ignore this perpetual issue, then taxpayers will be on the hook to pay higher taxes to cover the benefits promised to past government employees.”

According to the study, Dallas only has $3.4 billion available to pay $7.1 billion worth of bills. This $3.7 billion shortfall is an improvement by $1.9 billion from the prior year. So, the city improved and still earned a D — not good.

Dallas is losing residents. Its population shrank by 0.4% between April 2020 and July 2022, according to U.S. Census data. Even worse, we are losing young families. Many of those move to suburbs, which get high grades by Truth in Accounting. Plano finished third in the country and best in the state, earning it a B and a healthy surplus of $5,100 per citizen. Arlington ranked 16th and also earned a B thanks to its ability to run a surplus.

The budget for the city of Dallas continues to grow larger and larger, yet the delivery of services does not improve. The city offers far more services than it once did and promotes numerous programs. Whether it can afford all these, and if they are essential, is unclear.

I believe the city will have to address its spending habits. The city recently had to sell bonds to pay off its $55 million judgment in a gas drilling disaster. The City Council is already talking about more bonds (outside those in the bond package) to cover repairs at City Hall.

The upcoming bond election is necessary. The city must address its infrastructure. It must also repair the pension funds. Breaking the bond items into individual referendums gives voters the opportunity to determine which rise and fall on their own merits.

The city should not, however, expect a bailout from the state Legislature. Houston, Dallas and Austin have culturally and fiscally seceded from the rest of the state of Texas. The big cities may have a rude awakening when they look for a bailout of their pension funds. The state’s affluence and influence has shifted away from big cities and toward their bustling suburbs.

If Dallas cannot right the ship financially there could be dire consequences. Citizens could see the rising taxes and the elimination of the over 65 property tax exemption. Voters could find themselves thinking about the appropriate level of austerity.

While municipal bankruptcies are rare, they do occur. In 2020, a Pew Charitable Trust study determined 31 cities had done so since 2001, most famously Detroit in 2013. Interestingly, Detroit earned a grade of C in the most recent study, placing 39th. When you are looking up at Detroit in the standings, maybe you need to take a hard look at what you are doing.

The citizen satisfaction survey determined nearly half (47%) of citizens polled believe they are not receiving a good value for their tax dollars. Likewise, only 28% of citizens polled were “pleased with the overall direction that the city is taking.” Dallasites are frustrated with the series of debacles that have befallen the Broadnax administration.

It’s the administration of outgoing City Manager T.C. Broadnax that has determined that City Hall should be borrowing to the max. Can that judgment be trusted? Will our future city manager be as aggressive?

During a boom time, Dallas has increased its debt and earned a failing grade. Now, the city must hire someone capable of properly managing so much money.

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