TAX NEWS - JUNE 2010

Dallas Tax: With a $130 million budget gap looming, a tax increase is a very real possibility

Proposed budget cuts threaten to gut the Dallas library system, potentially forcing spending to be slashed and libraries to be shuttered multiple days each week. But the antidote, some library backers say, is simple: Raise taxes.

Just add a couple cents to the tax rate, and libraries – as well as rec centers – could be spared from the budget ax, some have suggested.

Dallas' daunting shortfall also could force painful cuts in the police department. But some public safety associations have offered their own simple solution: Raise taxes.

Just increase the tax rate by a cent or two, and the police department could remain intact, some have suggested.

And so it begins.

As the summer of budget cutting gets under way, a number of organizations and constituencies are marshaling forces and contemplating self-preservation strategies. Unfortunately, they all seem to have the same suggestion for the City Council: Raise taxes and save (fill in your department here).

With a $130 million budget gap looming, a tax increase is a very real possibility. But the council can't just tax its way out of this mess. Cuts – the ugly, hard, unpleasant kind – will need to be made as well.

So, library supporters, police associations and other groups with a pitch to make could be far more effective by offering compromises and helping the council prioritize the most essential items in their budgets.

Library backers are right. The proposed cuts are devastating and would deprive Dallas residents of an important resource. Public safety groups are right, too. After working so hard to hire more officers and reduce crime, we can't afford to backslide.

But digging in and demanding a tax hike to leave any part of the budget untouched is unrealistic.

A tax increase here for the libraries, a tax hike there to protect police, another increase to protect other worthy line items – that all adds up far too fast for the taxpayers footing the bill.

As a number of constituencies gear up for this budget battle, they should consider solutions, not just slogans.

The challenge for the City Council will be to resist pressure to protect the squeaky wheel. Too often, groups with a good ground game manage to ward off cuts. They round up enough people to fill the council chambers, put everyone in matching T-shirts, give impassioned speeches, and – voila – some of their funding is restored.

This year, there will be far more squeaky wheels than the council can provide oil for. The chambers at City Hall are likely to be filled week after week with button-wearing, speech-giving groups that make very good points about the necessity of libraries, pools, recreation centers, senior services and more.

The fix is simple, they'll say. But the task at hand for the council is actually far more complicated.

With an eye-popping budget gap, the Dallas City Council is likely to take a hard look at increasing fees and raising the property tax rate. Revenue-generating options include:

- Increasing the property tax rate, which stands at 74.79 cents per $100 in value. A 1-cent increase would yield an additional $7.7 million. That would cost the average homeowner $17.02 per year.

- Raising water rates by 4.2 percent, which would result in an average monthly increase of $2.21 for residential bills.

- Raising monthly sanitation fees by 40 cents to establish an emergency storm response fund. The council is considering other adjustments to the sanitation budget but hasn't made final decisions.