A strong majority of Dallas City Council members voted Wednesday evening to restrict the size of a possible property tax hike this fall to help solve severe budget problems in the wake of the coronavirus pandemic.
The 12-to-3 vote limits the city to a property tax hike of just 3.5%, instead of up to 8%. The higher rate required declaring the pandemic as justification per the state law known as "SB2," which was approved last year.
“I want to take this option off the table," city council member Cara Mendelsohn said. "And if we were to pass this resolution and we were to increase taxes even close to this amount, we would be creating the next disaster for Dallas."
Dallas sales tax revenues fell sharply this spring with many businesses closed during coronavirus stay-at-home orders. The city of Dallas has a sudden general fund shortfall of around $25 million. Nearly 500 city employees have been furloughed through July. City officials forecast even bigger problems in the next city budget with service cuts likely.
City Manager T.C. Broadnax said he was required to put the higher tax rate option on the city council agenda Wednesday to keep the property tax option open for August budget deliberations under Senate Bill 2.
“I hate for you to get there in August and understand that you have no wiggle room,” Broadnax said. “We’ll find a way to get through it. But again, we’re only asking to preserve your own ammunition should you want to do something later.”
Council members Jaime Resendez, Tennell Atkins and Adam Bazaldua were the only supporters of the option. They represent Southern Dallas districts, which they said can’t afford service cuts.
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“With so much uncertainty, I cannot, in good conscious, vote against having as many options as possible,” Bazaldua said.
On questions from Resendez, Chief Financial Officer Elizabeth Reich said the difference between 8% and a 3.5% tax increase would amount about $150 a year for the average $303,000 value Dallas home.
“It’s extremely important that we keep all of our options on the table,” Resendez said.
Mayor Eric Johnson disputed the claim from city staff that the question needed to be put to the city council at this time. Johnson said every possible reduction should be made to the city budget before property owners are asked to pay more when so many residents are suffering financial problems of their own.