Creating a Sustainable General Fund

UPDATE: Earlier this year the Dallas City Council addressed the general fund needs after careful research and community input by implementing a public safety fee increase. The public safety fee was adopted by the City Council through a resolution on January 22, 2024. This fee will be reviewed annually and may be adjusted by the City Council as needed. 

Effective July 1, 2024, the Public Safety Fee will be $12.50 per City sewer account, and be collected with the monthly City bill. The Public Safety Fee is crucial as it provides direct financial support to Dallas Police, Fire, and EMS personnel services. 

WHAT IS THE ISSUE?

The City’s trajectory for the General Fund’s beginning fund balance is forecasted on a steep decline. The beginning fund balance is the best indicator of the health of the fund, as it represents the money available at the beginning of the fiscal year. As can be seen in the graph in the slideshow presentation linked below, the City’s General Fund is projected to begin fiscal year 2025-26 with a negative balance. This trajectory is caused by the following factors:

• Oregon Property Tax Measures 5 and 50
• Increased Demand for City Services
• Decreased industrial tax base in Dallas
• Deferred capital purchases, projects and maintenance needs
• Inflation

Immediate action is needed to sustain this fund.

HOW DO WE ADDRESS THE ISSUE?

There are both long-term and immediate solutions. The long-term solution is to grow the City’s industrial and commercial tax base. The immediate solutions are to either increase general fund revenues, or reduce the City’s General Fund services. The City is actively working on the long-term solution. However, this solution will take many years. Both the long-term solution and an immediate solution are needed to make and keep the General Fund sustainable now and into the future.

WHAT IS THE LONG TERM SOLUTION?

The long-term solution to making the general fund sustainable is to grow the City’s tax base. This is best accomplished by adding and expanding commercial and industrial businesses into the Dallas economy. The City has seen some recent wins in this area. One example of an industrial business recruitment was working with Ascentec Engineering to purchase the former Praegitzer/Tyco building on Monmouth Cutoff Road for their advanced metal manufacturing business. Ascentec has, and plans to invest millions of dollars into this property and their business, bringing many family wage jobs to the local community. An example of a commercial expansion is the Open Road headquarters on East Ellendale, this project is currently under construction and is a multi-million dollar investment into the local economy from an existing Dallas business.

You may ask yourself, isn’t all of the residential growth in Dallas fixing this issue, and why do we need more commercial and industrial growth? Property taxes from residential growth does not pay for all of the general fund services it uses. The reason being, commercial and industrial development are taxed at higher percentages of their real market value than is residential development. We are targeting growth in the commercial and industrial sectors to focus on high revenue and low resource consuming development. 

WHAT ARE THE IMMEDIATE SOLUTIONS?

1. Approve a Public Safety Operations Levy and remove the Public Safety Fee on the City Bill.
2. Create a Parks and Recreation District and increase the Public Safety Fee on the City Bill.
3. Approve a Public Safety Operations Levy and increase the Public Safety Fee on the City Bill.
4. Widespread Reductions of General Fund Services.
5. Over the next five years, incrementally increase the public safety fee on the monthly city bill by $25.05.

Option 1- Approve a Public Safety Operations Levy and remove the Public Safety Fee on the City Bill

The public safety levy would be a 5-year property tax on the taxpayers inside the City limits of Dallas. As such, the levy would be voted on by the electorate inside the Dallas City limits. 

The public safety fee is a $4.95 fee that is collected monthly on the City bill. This fee generates roughly $460,000 in revenue each year. It was designed to pay for two police officers and two firefighter/EMTs. If the public safety operating levy were to pass, then this fee would be removed from the monthly City bill, once tax revenues are collected.

Under Option 1, the public safety levy would be in the amount of $1.90 per $1,000 of assessed property value. This is the highest tax rate of any option, because this option would also remove the current public safety fee from the monthly City bill. Under option 1, a Dallas property owner whose property is assessed at $300,000 would pay an additional $570 a year in property taxes. Also under this option, the monthly public safety fee would be removed from the City Bill.

Option 1 would sustain the General Fund over the next five years by adding revenues to directly support public safety services.

Option 2- Create a Parks and Recreation District and increase the Public Safety Fee on the City Bill

A Parks & Recreation District is a standalone taxing authority with its own elected governing body and staff. If created, the City would turn over the ownership and operation of all City of Dallas parks and recreation amenities and programs. 

The parks and recreation district can only be created by an affirmative vote of the registered voters inside the boundary of the proposed district. The proposed parks and recreation district boundary is the same boundary as the current Dallas School District boundary. 

If the district were created, the tax rate to support the district would be a permanent tax rate. 

Also under Option 2, it is proposed that the public safety fee currently on the City Bill be increased to pay for public safety personnel.

Under Option 2, the parks and recreation district permanent tax rate would be in the amount of $1.25 per $1,000 of assessed property value. This is the lowest tax rate of any option. The public safety fee would increase from $4.95 to $10.50 each month. Under Option 2, a Dallas property owner whose property is assessed at $300,000 would pay an additional $375 a year in property taxes. Also under this option, every utility customer in Dallas would pay the monthly public safety fee of $10.50. A Dallas property owner who also pays a monthly City bill would pay $441.60 more each year than they currently pay.

Option 2 sustains the general fund by removing from the general fund the parks and recreation expenditures from the City’s budget, and by adding revenues directly to public safety services.

Option 3- Approve a Public Safety Operations Levy and increase the Public Safety Fee on the City Bill

The public safety levy in Option 3 would be a 5-year property tax on the taxpayers inside the city limits of Dallas. As such, the levy would be voted on by the electorate inside the Dallas city limits. 

Under Option 3, the public safety fee would be increased.

Under Option 3, the public safety levy would be in the amount of $1.30 per $1,000 of assessed property value. In addition, the public safety fee would increase from $4.95 to $10.50 each month. Under Option 3, a Dallas property owner whose property is assessed at $300,000 would pay an additional $390 a year in property taxes. A Dallas property owner who also pays a monthly City bill would pay $456.60 more each year than they currently pay.

Option 3 sustains the general fund over the next five years by adding revenues to directly support public safety services.

Option 4- Widespread Reductions of General Fund Services

Option 4 reduces our expenditures to meet current revenues. If a new revenue solution is not preferred, then reductions to general fund services starting in July 2024 will be necessary. Those reductions will be as follows:

• Eliminate 6 positions from Fire & EMS Department
  • 3 Paramedic/EMTs, 2 Firefighter/EMTs, and 1 Division Chief
• Eliminate 6 positions from the Police Department
  • A Sergeant, Traffic Safety Officer, School Resource Officer, Detective, and 2 Patrol Officers
• Close the Aquatic Center, and eliminate 36 positions
• Close the Library on Saturdays, and eliminate 1 position
• Eliminate the Parks Manager position, 1 Code Services position, a half-time Parks Maintenance position, and a half-time Facility Maintenance position

Even with these reductions, the City would continue to collect the current $4.95 public safety fee on the City bill.