The Community Bond Task Force isn’t getting the information they need from city staff as they prepare a list of recommended projects for a May 2024 Dallas bond election, prompting several Dallas City Council members to ask Wednesday if the election could be delayed to November.
The elephant in the room is that the city could also ask voters to approve general obligation bonds related to the police and fire pension, which is facing a $3 billion deficit.
City officials have said it would be more expensive to hold a municipal bond election in conjunction with a presidential election, and a delay could interrupt projects in the city’s capital improvements plan.
City Manager T.C. Broadnax said during a six-hour meeting Wednesday that he’s OK with delaying the election, but took issue with the reasoning behind the request.
Mayor Eric Johnson suggested a future briefing from the city secretary’s office about election dates and expenses.
Broadnax Addresses Bond Election
Broadnax said Wednesday that the matter of when the bond election is held shouldn’t be conflated with the pension deficit, which may not be addressed through bonds and won’t likely be resolved this year.
“We do not have to solve a $3 billion problem in five years or 10 years,” he said. “We’re going to lay out a plan that might take 30 years to have it fully funded at whatever state requirements we have. I think the conversation around the vote and timing is a political question in some respect. I don’t think it’s really a financial question. I think that’s a little bit of a stretch to say that we shouldn’t issue bonds associated with capital … in May versus November whether it’s a $1 million election cost or we’ve got some plan pending for pensions.”
The city manager said he believed it was the will of the council to fund infrastructure projects immediately.
“To hear that it’s OK to wait six months, that’s probably new to my staff,” he said. “We’ll never run out of work because there’s a lot of work to do. We’ll always have a pothole to fill. We’ll always be able to do those kinds of construction projects. Even in the last two weeks, all I’ve heard from the public is, ‘When is my street going to be started?’ and it’s been on a bond program or a needs list for 20 years.”
He said he didn’t want the public to perceive that other needs in the city would be put on hold because there’s a pension issue to deal with.
“We’ve got a hard-working group of residents,” Broadnax said of the bond task force. “While they’re working hard, while I think we may want to try to use the understanding that there may not be a flow of information happening as quickly as they might like it, I think the tougher decision is going to be how they squeeze all those needs into a $1 billion bond proposition.”
Broadnax and Chief Financial Officer Jack Ireland reiterated in Wednesday’s meeting that it’s unclear whether the pension matter would be addressed by issuing bonds. An actuary is studying the feasibility, officials said.
“At the end of the day, let’s not conflate the pension issue and the fact that we haven’t even made a decision — or even if it’s practical or reasonable to issue pension bonds — to try to not move forward with the things we know we need to have done,” Broadnax said.
Council Members Discuss Bond Election Dates
Council members were briefed on the 2024 bond program and explained why a delayed election might be warranted.
A big takeaway from the discussion is that the city has increased its bond capacity from $1 billion to $1.1 billion.
Ireland explained that number doesn’t have to represent what goes before voters but it’s the capacity available.
Council members Adam Bazaldua, Cara Mendelsohn, Paula Blackmon, and Gay Donnell Willis questioned Wednesday why the bond election is being held in May rather than November 2024.
“I just think we need to be very thoughtful in not rushing this,” Willis said. “We’ve got the pending bond election but then we’ve also got this police and fire obligation bond.”
Mendelsohn shared general feedback from her appointees on the bond task force.
“They feel very rushed and they have asked questions of staff that they have not yet gotten answers to,” she said. “Slowing this down a little bit will allow us to actually have some accurate numbers for our pension.”
City of Dallas Budget Workshop
Wednesday’s briefings kicked off with a focus on Broadnax’s proposed $4.63 billion recommended budget, based on a property tax rate of 73.93 cents per $100 assessed valuation.
Staff gave an overview of employee benefits for the city’s more than 16,000 employees and reviewed the timeline for budget adoption.
A public hearing is slated for Aug. 23, with budget workshops to follow Aug. 30, and Sept. 6. The council is scheduled to adopt the budget and property tax rate Sept. 20 for the fiscal year that begins Oct. 1. In the meantime, council members will propose amendments to Broadnax’s recommended budget.
Since this week’s presentation focused solely on the timeline, council members weren’t permitted to ask questions about the proposed budget document. They did have plenty of questions during last week’s meeting, most of which remained unanswered on Wednesday.
Ireland said the council can expect answers to come by memo later this week.
Wednesday’s briefings also included a discussion on the city’s financial capacity and general obligation debt.
The current outstanding debt as of September 2023 is $2.2 billion, Ireland said. The debt service expense for FY24 is $342.9 million, which includes $253.1 million principal and $89.8 million interest. The figure includes previously issued general obligation bonds, certificates of obligation, equipment notes, and pension obligation bonds, Ireland explained.
The next opportunity for Dallas residents to weigh in on the proposed budget is a public hearing Wednesday, Aug. 23, at 9 a.m.
