The current budget shortfall may have prompted Dallas to furlough thousands of city employees, but City Manager Kimberly Tolbert says the more immediate concern is what happens next.

Dallas is already working toward its next fiscal year, which begins Oct. 1, with a balanced budget due to the City Council in early August and a budget workshop scheduled for Aug. 11. At the same time, city officials are waiting on updated sales tax figures that could change the financial picture before the new budget takes effect.

During a recent meeting with Dallas Weekly and other local media, Tolbert explained how the city’s budget process works, why revenue projections can shift during the year and why some taxpayer dollars cannot simply be redirected to address a budget gap.

The conversation offered a closer look at the deadlines and financial restrictions shaping Dallas’ next budget.

The Clock Is Ticking

Tolbert said the city has been working for months to address the projected shortfall in the current fiscal year budget while simultaneously preparing for the next one.

The upcoming fiscal year begins Oct. 1. Tolbert said the administration was required to deliver a balanced budget to the City Council by Aug. 7, followed by a budget workshop scheduled for Aug. 11. 

That timeline creates a challenge because some of the city’s most important revenue information arrives after the budget process is already underway.

Sales tax data, for example, comes to Dallas from the state with roughly a 45-day lag. Tolbert said the city would not receive its July sales tax information until August. 

That delay is part of the reason Tolbert said she pushed back some of the city’s remaining furlough days. Waiting could give officials another opportunity to see whether sales tax collections were improving before additional furlough days were imposed.

“If the sales tax numbers are going in the right direction and not the wrong direction,” Tolbert said, the city could have a different financial outlook.

The approach does not mean the city can simply wait for better numbers, however. Tolbert said the administration has to budget based on the information available and cannot count on revenue that has not yet materialized.

Why Dallas Can’t Budget on Hope

Each year, the city develops its budget by projecting how much revenue it expects to receive, with property and sales taxes serving as two of its primary sources.

But those revenues are not entirely within Dallas’ control.

Tolbert explained that the state sets the sales tax rate, with the total rate currently at 8.25%. The state receives the largest portion, while the remainder is divided among local entities, including Dallas and DART. 

Sales tax collections can also fluctuate with consumer spending. Tolbert said Dallas began warning City Council members earlier this year that sales tax revenue was not keeping pace with projections, creating an estimated shortfall of roughly $6.3 million to $6.5 million in that area alone. 

Property tax revenue is subject to another restriction. Tolbert said state-imposed limits restrict how much additional property tax revenue the city can collect without taking additional steps, including potentially going to voters. 

The result is a budget process where Dallas has to make decisions based on projected revenue rather than money it hopes might arrive later.

Tolbert said the city is required to submit a balanced budget, meaning projected revenues and expenditures must match.

“You wouldn’t want me doing that,” she said of creating a budget around uncertain revenue. 

Personnel costs are particularly significant in that equation. Tolbert said approximately 73% of the city’s general fund budget goes toward its workforce, making employee costs one of the largest areas the city can examine when trying to reduce spending. 

Where the Tax Dollars Go

Tolbert also offered a breakdown of where a significant portion of Dallas’ property tax revenue goes.

She said approximately 65% of the city’s property tax dollars are directed toward public safety and related functions, including police, fire, 911, emergency operations and municipal courts. 

That allocation, she said, means the city has less flexibility with its property tax revenue than residents may assume.

The distinction is important when residents ask why the city cannot simply redirect existing tax dollars toward another department or emerging budget need.

Much of the money entering the city is already committed to specific purposes, departments or obligations.

Not All City Money Is in the Same Bucket

That distinction also applies to major capital projects.

Tolbert addressed questions about why Dallas can continue moving forward with park and other capital projects while simultaneously asking employees to take furlough days.

Her answer: The money often comes from entirely different sources.

Tolbert said some park projects have been funded through state dollars, private contributions or discretionary bond funding rather than the city’s general fund. Those dollars come with restrictions on how they can be spent. 

Bond dollars, for example, are intended for capital projects. They cannot simply be transferred to cover day-to-day operating expenses such as employee salaries.

The same distinction applies to projects such as the Klyde Warren Park expansion, which Tolbert said did not rely on a general fund contribution from the city.

“Different buckets, different sources, different buckets,” she said, emphasizing that each funding source carries its own restrictions. 

For residents watching city spending, the distinction can be easy to miss. A project may carry a large price tag while still being financed with money that legally cannot be used to address an operating deficit.

Who Builds the Budget?

Tolbert also emphasized that balancing the budget is part of the city manager’s responsibility.

The administration develops the proposed budget and must present one that balances projected revenue against planned expenditures. City Council then has the opportunity to review, question and ultimately act on the proposal.

That responsibility also explains why Tolbert said she cannot simply wait until the end of the fiscal year to determine whether the city has enough money.

“I can’t get to September and then say, ‘Oh, you know what? We didn’t balance the budget,'” she said. 

The distinction between city administration and elected officials also came up when Tolbert addressed whether City Council members were subject to the employee furlough.

She said council members are not considered city employees under the City Charter and therefore could not be required to participate in the furlough program. Some council members have voluntarily offered to return an equivalent portion of their compensation, but Tolbert said that was their decision, not a requirement imposed by her office. 

What‘s Next?

The city’s financial decisions are now moving toward the next fiscal year, even as officials continue receiving information that could affect the final numbers.

Dallas’ new fiscal year begins Oct. 1, while the administration’s balanced budget deadline and the Aug. 11 budget workshop mark key steps in the process of determining how the city will fund its priorities in the year ahead. 

For residents, the coming weeks will provide a clearer picture of whether current revenue trends require additional cost-cutting measures or whether stronger-than-expected collections can ease some of the pressure.

Dallas Weekly will continue following City Hall and the city’s budget process as Dallas moves toward the Oct. 1 start of the new fiscal year.