The Dallas City Council is considering whether to divert some of its funding to the Dallas Area Rapid Transit Authority to address the city’s pension crisis, but transportation officials have warned that the move would have a negative impact on DART.
City Council members are looking for ways to quickly close the city’s pension shortfall, and one way to do that would be to cut sales tax revenue paid to DART by 25%, according to Councilmembers Tenelle Atkins and Paula Blackmon, who sit on the city’s pension committee.
DART collects a 1-cent sales tax (a 1 percent tax on every dollar spent) in all 13 member cities, and the transit agency has collected more than $400 million annually in Dallas for the past two years, according to sales tax data.
Atkins, who chairs the pension committee, Dallas Morning News City officials are investigating whether the transit agency is collecting more money than it needs to provide service. “Right now we’re just having discussions,” he said.
Dallas must develop a 30-year funding plan to address its pension problems. The city faces a $3 billion shortfall in its police and fire fund, which oversees the pensions of more than 10,000 current and retired police officers. The civilian pension fund also faces a $1 billion shortfall, city officials said.
The city has until November to develop a plan that it can submit to the Texas Pension Review Board.
The fund was on the brink of collapse nearly eight years ago, but the Texas Legislature passed a law reforming the system in 2017, keeping the fund afloat. Most of the pension problems stemmed from the board’s approval decisions that supported unsustainable benefits and inappropriate investments, such as ownership of a 3,100-acre California resort purchased in 2006 for nearly $111 million, said Kelly Gottschalk, director of the Dallas Police and Fire Pension System. news The resort was subsequently sold in 2018 for $22 million.
Blackmon and task force members Chad West and Gay Donnell Willis said they would be open to evaluating various revenue sources, including those related to DART, and making ongoing payments to offset some of the burden.
Blackmon, who already mentioned funding for DART at the April meeting, said funding could come up again in the coming weeks.
City officials have previously considered selling off their real estate portfolio to pump more money into the fund and have also recommended seeking voter approval to change the rate at which city officials contribute to the city’s retirement fund.
Impact on vulnerable populations
In a May 6 memo to lawmakers on the Transportation Committee, DART CEO Nadine Lee warned that lowering the sales tax would “negatively impact transit service.”
Lee said the impact of collecting a 0.75% sales tax instead of the current 1% would result in a $6 billion revenue loss over the current 20-year financial plan period.
“For reference, an amount of this magnitude represents our entire capital budget for bus, light rail, internal facilities and technology projects over the next 20 years. This includes mission-critical items such as modernizing our nearly 30-year-old light rail system, replacing our aging light rail and bus fleet, replacing hundreds of bus shelters and benches, and investing in bus routes to increase speed and reliability,” Lee said in the memo.
In his memo, Lee warned that bus and light rail services could experience delays of up to 30 minutes, meaning most riders could have to wait an hour for local buses.
The North Park Shuttle (DART 402), which serves three bus stops from the Park Lane station to the entrance of North Park Center, will be eliminated, and GoLink, which shuttles passengers to DART stations, will see a 30% reduction in service, according to the memo.
DART also expects service cuts, especially in areas where lines intersect, could affect areas such as South Dallas, West Dallas, the Inland Port and the Legacy West Zone.
“It is difficult to emphasize enough the negative impact these service cuts will have on the most vulnerable people who rely on DART for access to jobs, health care, education and more,” Lee said in the memo.
Lee also warned that the disproportionate and disproportionate impact on low-income and communities of color could violate federal guidelines under Title VI of the Civil Rights Act. Meanwhile, the state law that established DART binds member cities to DART’s debt obligations, which are unlikely to go away despite the sales tax cut, the memo said.
Blackmon was asked at the pension committee meeting April 11 whether DART still needs the full amount to fund the project. He said the system DART is building today is different from the one it had in the 1980s when the system was first built.
Blackmon said. news It was not clear how the transit agency would spend the money.
“They have money, they don’t tell us where they’re spending it. They just give it back,” Blackmon said of the transit agency. “Are they really creating opportunities to expand public transportation, or are they just spending money?”
DART Chief Communications Officer Jamie Molina said DART’s budget and financial plan are approved in public meetings of the DART Board of Directors and have undergone financial audits that have passed auditor scrutiny for the past 20 years.
“We have a 20-year financial plan and we meet regularly with each city to discuss their financial plan and budget. The public improvement funds that we’ve provided to each city are being used for complementary transportation projects that will not only help improve the system but also the city,” Molina said.
Blackmon said some of the additional revenue from the sales tax could be used for public safety districts, salaries and pensions, and said he understands DART’s concerns that less funding would force the transit agency to adjust staffing and service.
This isn’t the first time city council members have floated the idea of changing DART’s funding plan to address the city’s pension problems. In 2017, former city council member Scott Griggs proposed directing one-eighth of DART’s sales tax revenue to the pension fund.
At the time, DART’s board opposed the move, stressing that defunding would hinder the transit agency’s ability to repay debt and provide service.
Things have changed since then: Sales tax revenues have doubled across the region, according to sales tax data, and DART’s financial situation has improved.
In 2022, with the infusion of federal COVID-19 relief funds, the transit agency was in a position to refund some of the excess sales tax to member cities that felt disadvantaged by DART service.
Blackmon said other member cities in DART’s service area may also agree to reduce the funding they give to DART for service. “Plano needs money, Irving needs money, we all need that extra penny,” Blackmon said. “If you’re not providing the kind of service that people are saying, ‘Give me more, give me more,’ then you should evaluate it.”
At the April 15 transportation meeting, Lee said he was concerned about conversations suggesting the transit agency doesn’t need that much sales tax revenue. DART is what it is because of the money the city pays for it, Lee said.
“If that’s what you want [DART] To get better, we’re going to need additional investment,” Lee said. “If we cut funding, we won’t even be able to sustain what we’re doing right now, which is especially impactful for a city like Dallas. [which] There are particularly many bus services available.”
Staff writer Everton Bailey Jr. contributed to this report.
