Dallas’ finances are in trouble—deep trouble. Between deferred maintenance and a crippling pension crisis, it’s time for city officials to set priorities. One councilman has proposed a solution—revaluate the more than $260 million in annual payments sent to Dallas’ struggling transit agency.
Moody’s, a credit rating service, has lowered Dallas’ credit rating repeatedly over the last couple of years. City finances are under pressure because of a Police and Fire Pension Plan underfunding of at least $3.6 Billion, the need to raise pay for police and emergency responders, and a host of other problems.
The pension crisis is the result of a number of issues including mismanagement of fund investments by the Pension Board, which includes three Dallas city council members. In the meantime, Mayor Mike Rawlings and the council have decided to delay the May Bond Program, while many streets are literally crumbling and alleys look like war zones. Also hovering in the background is a long-standing suit against the City for police and firefighter pay raises, originating from a 1979 referendum.
Dallas needs real solutions. Good decision makers generally set priorities based on the core values of their major stakeholders. In this case, the primary stakeholders are Dallas taxpayers—the citizens who foot the bill. However, police and firefighter services are a primary component of the budget and very important to Dallas taxpayers’ safety and wellbeing.
On one hand, a large increase in city taxes would be a temporary “fix” for the pension issue. However, this seems unfair to taxpayers, who are certainly not responsible for the fund’s mismanagement. This year Dallas officials already raised taxes, when property values rose by 10%, effectively increases taxes by the same amount on the average taxpayer.
Even after repeated tax increases, the city is facing significant deficits and recent credit downgrades. Imposing an even larger tax increase could cause an exodus of businesses and citizens, further eroding the city’s tax base. Look no further than Detroit and Chicago as notable examples.
On the other hand, some have suggested that pension benefits be reduced or that newly hired policemen contribute more to their own retirement. The Pension Board and unions oppose this, arguing that pensions mitigate what they consider below-market pay. Also consider the demoralizing effect of cutting police pensions too sharply, which certainly isn’t in the best interest of taxpayers.
City Council member and Pension Board Trustee, Scott Griggs, recently stepped up with a solution. His proposal would take 1/8 of payments to DART and put it toward the pension shortfall.
Griggs says the extra $36 million a year would shore up the Pension Fund over time and avoid a public safety crisis. But DART officials say the effect on riders would be disastrous. However, DART ridership is stagnant or declining after an investment of over $10.5 Billion in sales tax revenue alone (half of it by Dallas, half 12 other DART member cities).
Griggs’s idea would require approval from state lawmakers, which would in turn have to put the proposal to a public vote of local citizens. A good solution would be to expand Griggs’ proposal to give all of the DART member cities flexibility to divert funds to other uses
Taxpayers need more control over how their tax dollars are spent. Griggs’s proposal would give voters the choice to either expand the faltering rail system, or use the money to support Dallas police officers and their families, who in turn provide a valuable and lifesaving service to taxpayers.