City leaders in Dallas are addressing a projected $51 million budget shortfall driven by slower tax growth, inflation, and increased public safety expenses. To maintain fiscal balance, the city has already enacted furlough days, travel restrictions, and hiring freezes. City Manager Kimberly Bizor Tolbert cautioned council members that this financial pressure is expected to continue beyond the current budget cycle.
The draft budget for fiscal year 2026-27 proposes a record total of $5.66 billion while still working through a similar deficit. A significant factor in the strain is Texas state law, which limits property tax revenue growth to 3.5% without voter approval. This restriction prevents the city from increasing a primary revenue source to match rising payroll, pension, and service costs.
Jack Ireland, a former Dallas chief financial officer, noted that this issue is not unique to the city or the state. He told council members that large municipalities across the United States are experiencing similar budget shortfalls. Data from The Pew Charitable Trusts indicates that 20 of the 25 largest U.S. cities have reported budget gaps.
Other Texas cities are also facing financial challenges. Houston officials projected a $174 million deficit in April, while Austin’s city manager proposed a maximum-rate property tax increase to address a $26.4 million shortfall. Fort Worth is dealing with a gap of nearly $80 million, and San Antonio expects its deficit to exceed $158 million by 2027.
Outside the state, Sacramento and San Francisco have also grappled with significant deficits in recent budget cycles.
