Busted

Even in these boom times, Dallas is broke, thanks to a city council that has been giving away the store

"That would exceed the rollback rate," Cook conceded.

It's that close. If they spend the little drip of funny money, they won't have to raise the tax rate by just over two pennies. If they raise it by even that tiny amount -- and if the taxpayers ever catch on -- then the taxpayers could force a rollback election.

In fact, while you were busy reading the Morning News' stories about the proposed tax cut, you may have missed the fine-print ad the city was required by law to publish in the Morning News on August 14 showing that a new tax rate of 62.3 cents would amount to no tax increase. That's the rate that would mean most homeowners would be writing checks for roughly the same amount they did last year.

Instead, the city manager is proposing a rate of 64.66. According to the law, that's a tax increase -- not a cut -- even if it is slightly less than last year's rate.

Don't feel bad if you missed the notice in the back pages of the News. Apparently the paper's reporters did too.

There are questions here. Certainly a tough one is why the city council and city manager would fudge with the public on such a crucial good-faith issue as whether they're trying to raise taxes. The Observer tried unsuccessfully over two weeks to reach City Manager Teodoro Benavides or his top assistant Mary Suhm to discuss the basic underlying issue of the tax cut as well as other questions. A number of city staffers below their levels were willing to discuss smaller details of the budget process, but the Observer was not able to reach Benavides or Suhm.

The biggest question the Observer would like to ask Benavides is, Why? Why does he or the city council have to play games at all this year? Why aren't they all so flush that they could afford to be honest?

"Everything's going up and up. The economy, the sales taxes, the property tax base. Yet everything is being cut," says Glenn White, president of the Dallas Police Association, which represents police officers. "Something's not right."

Cook, the city's budget director, says he's almost certain the city council will find a way to stay below the rollback limit: "I would be tremendously surprised if the city council adopted a tax rate above the rollback rate."

But all of the options under serious consideration are for a tax increase within nibbling distance of the rollback limit at 8 percent. So, for a tax hike close to 8 percent, what is the city offering taxpayers?

This increase will buy Dallas taxpayers a budget that eliminates dozens of jobs, gives miserly pay raises to city employees, and calls for cuts in the operating budgets in eight departments -- budget and management services, the city controller's office, city courts and jail, human resources, international affairs, police, public works, and sanitation.

In the ballyhooed Year of the Pothole, when the big nuts-and-bolts council was going to get out and fix those streets and repair those sewer lines, what this enormous tax hike promises is a 15 percent slash in the operating budget for public works. However long you thought you were going to have to wait to get your curbs fixed, move the date ahead by that much.

They're even going to cut the department that oversees the budget by 11 percent. Presumably that will make for fewer sharp pencils to keep track of what they're up to.

But what does all this mean about the city's financial stability? If they're trying to slip a steep tax hike by the voters and they still have to whack off major services, what should that tell us?

"We're in trouble," council member Donna Blumer says. "We're in serious trouble."


Give away

The mysteries here are not hard to solve. The biggest and most important one has to do with the growth of the tax base. Mayor Ron Kirk is fond of reminding audiences that the tax base in Dallas has grown by a third during his five years in office. So, given that the tax rate itself has actually stayed fairly flat during Kirk's tenure, shouldn't that mean the city's revenues from the property tax have also gone up by about a third? Bigger tax base, bigger tax revenue?

Then why is it that property tax revenues under Kirk have actually gone up by less than half that amount -- just over 15 percent?

Bernard Weinstein, director of the Center for Economic Development and Research at the University of North Texas, suggests a simple answer for that one:

They gave it away.

"They give exemptions, TIFs [a type of tax break for developers], abatements, freeports," Weinstein says. "Therefore the coffers are not growing as fast as they might, given the change in the tax base."

Weinstein's take on where the money goes is strongly supported by numbers from the Dallas Central Appraisal District, the independent agency that keeps track of the tax base and any tax breaks handed out by the city. According to the DCAD, the city's tax base grew by $3.84 billion last year. Of that amount, the city of Dallas has given away $1.64 billion in exemptions, abatements, and freeports. (A freeport exemption says that you can bring goods here, store them or work on them for a while, and then ship them off somewhere else without paying local tax.)

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