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

In recent weeks, council members and members of the city manager's staff have been out on the hustings, engaged in an aggressive public relations campaign to convince taxpayers that Southwestern Bell Corp. is solely responsible for screwing up the city's budget.

At a town hall meeting at the Grauwyler Recreation Center on August 19, virtually every person who rose to ask questions or speak demanded to know why the new budget didn't do more for street repairs, libraries, parks, and other parts of the general infrastructure of communities.

Assistant City Manager Ramon Miguez replied by linking funding shortages for various projects to what he said was a threat by Southwestern Bell to withhold $20 million in annual franchise fees.

Dallas Public Works Director David Dybala must sell bonds this year to finance major city projects. Will he warn investors of the city's financial straits?
Mark Graham
Dallas Public Works Director David Dybala must sell bonds this year to finance major city projects. Will he warn investors of the city's financial straits?

Councilman John Loza told the audience, "Dallas seems to be the first city where a utility has indicated they are not going to be paying franchise fees.

"I hope you will literally, now I do mean this, literally pick up your phone," Loza said, "and call Southwestern Bell and let them know you are aware of the fact they are basically holding the city of Dallas hostage, and that you don't agree with that, and you don't go along with that."

Loza, who would make the paper in the days ahead for his conviction on a drunk driving charge and for appointing to a city board a friend who was wanted on several outstanding arrest warrants, told the audience, "I really do think we need to let them know that this is an act of corporate irresponsibility that we will not stand for."

Southwestern Bell's version of the dispute is different. They say communications companies all over the country have been challenging what they call old-fashioned rate structures left over from Ma Bell days. In those days, when the phone company was thought of as sort of a public utility, cities required phone companies to hand over a straight percentage of their profits, known as the franchise fee. In these new wild and crazy times in the communication industry, phone companies and other utilities want to pay only the actual cost of running their lines on public land -- presumably a much smaller amount.

They say Dallas has known it was losing major lawsuits with all of its utilities over right-of-way franchise fees for the last year and has done little to get ahead of the game.

But mainly they say the city of Dallas is trying to make them promise they will continue to pay franchise fees through the city's current budget cycle, even if a court eventually rules that those fees are illegal. Bell says it will pay the fees, but it wants Dallas to pay back any fees the court says are illegal so it can pass the money back to its customers.

Otherwise, the customers can sue Bell.

On August 23, a federal judge in Dallas accepted Southwestern Bell's standing offer to keep paying its franchise fees to the city pending an outcome of the suit. But Southwestern Bell did not have to promise to keep making the payments if a court says they're illegal.

Bell is one of nine utilities that have sued the city over its franchise fees. Seven of those companies have already won. It appears utilities will continue to pay some kind of fee or rent to cities, but the calculation will be different and probably will not include any of the straight cuts from profits that cities got in the good old days.

The bottom line here, in spite of how the council and staff are spinning it to the public, is that the city is budgeting $20 million a year in revenue that it not only can't count on but may eventually have to pay back.

Of the shoes to fall, that's the ballet slipper.

The work boot

At the Grauwyler town hall meeting, Walter Pearson, a real estate appraiser who lives in council member Veletta Lill's district, raised his hand to ask Loza, Lill, and Miguez what their plans were regarding the city employees' pension fund. All three assured him the pension fund question is "still in litigation" and therefore not worth talking about yet.

"We would be trying to read a crystal ball," Loza said.

If they ever actually looked in that crystal ball, one of the first things they would see is state Sen. Florence Shapiro, chairman of the Senate State Affairs Committee, probably signaling madly for them to answer the telephone. Shapiro tried getting through to the council in an August 11 letter delivered to the mayor, the council members, and members of the board of the Dallas Employees' Retirement Fund.

The State Affairs Committee oversees the agency that oversees all state and local public employee pension funds in Texas. In her letter, Shapiro did not mince words:

"As you know, the fund is contributing $20 million less than the amount shown by the actuarial analysis as necessary to balance the fund."

Plain English? Dallas needs to find a way to put $20 million a year in new money into its pension fund, or it needs to take the money out of the pockets of its employees, or it needs to gouge it out of former employees now living on their pensions.

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