TAX NEWS - June 2010

Dallas ISD trustees question budget proposal for next year

Dallas ISD trustees had mixed opinions Thursday on next school year's proposed budget, which includes a tax decrease and a bigger reserve fund but no raises.

During a presentation of the proposed $1.25 billion budget, some trustees said they'd like to see raises for district employees.

"I think there is some kind of way you could cut the expenditures to 1 ½ percent in order to afford a 2 percent increase for our staff," trustee Lew Blackburn said.

But some trustees didn't back raises, saying any extra money should be put in the district's reserve fund, or fund balance, which was left dangerously low after a budget crisis in 2008.

"My impression is that our pay is quite competitive already," trustee Jack Lowe said. "My further impression is that our need is to rebuild our fund balance if we can come up with a surplus."

Chief financial officer Larry Throm said he would not be proposing raises.

The reserve fund is expected to grow more than initially estimated – from about $37 million to $60 million. But the amount is still inadequate for a district the size of DISD, said Throm, who estimates a healthy reserve for the district would be $150 million.

District officials said additional revenue and lower spending in some departments are allowing more money to go to the reserve fund.


Tax cut

Under the proposed budget, taxpayers also would see some tax relief.

DISD's tax rate for the interest and sinking fund, which is used to pay down debt, is proposed to decrease by a few cents, saving the average property owner about $55. The fund is used to pay off bonds.

However, the district will need to borrow $80 million to make ends meet until local tax dollars flow in. Throm said the district would borrow the money over the course of several months.

School districts typically can tap into their reserve funds to meet budget costs until funds flow in, but DISD's is too low for that. This would be at least the third consecutive year the district has borrowed money under such circumstances.

In 2006, DISD covered $20 million in day-to-day expenses by borrowing from its voter-approved school bond fund. A couple of years later, in August 2008, the district borrowed $125 million to be able to meet payroll and other expenses. Last year, the district borrowed $85 million in so-called tax anticipation notes, which are paid back once tax collections start rolling in.

Trustees are scheduled to consider approving the budget June 24.