Early voting has started, and Dallas voters will be asked to approve a $642 million bond package, broken into Prop 1 for transportation, Prop 2 for storm drainage, and Prop 3 for development in southern Dallas. In a recent editorial The Dallas Morning News recommended yes on all three, and reminded voters of the mantra we hear so often: Taxes will not be raised.
But if that’s true, then what is the risk to the voter, and why do they need our approval?
According to language in the City’s budget, “The primary source of revenue for the debt service fund is the ad valorem property tax. The adopted ad valorem tax rate of 79.70¢ per $100 assessed value is split into two rates. Approximately one-third (25.91¢) of the tax revenue is used to pay principal and interest on the City’s outstanding general obligation debt.”
In other words: Yes, we pay debt service with taxes.
So when we vote, the city is asking us to trust that they are being prudent and that they have a plan for paying the debt service at the existing tax rate. Why should we trust them?
I spent numerous hours looking at dallascityhall.com, trying to answer that question. Here’s a summary of what I learned:
1) This is our first bond package since 2006, and since that time identified projects and needs have increased substantially.
2) But, the economic downturn has meant decreased revenues and budget cuts for the city.
3) As a result, the 2012 bond package is much smaller than it might be, based on an assessment of the city’s capacity to repay the debt at the current tax level.
4) Dallas is rated Aa1 by Moody’s and AA+ by Standard and Poor’s which allows us to borrow (issue debt) at favorable interest rates. These ratings also reflect sound management of the City of Dallas’ financial resources.
So what are we voters really approving, if we pass the bond package? A yes vote means approval of borrowing for improvements that we believe the city can afford.