A collaboration between Lewis McLain & AI
A note on where I’m standing
I started in Texas municipal finance in 1972, as budget director for the City of Garland. By the time this story started, I was the Dallas County Budget Officer, the first in Texas. I watched Dallas City Hall open in 1977 — I.M. Pei’s inverted wedge, the most confident building any Texas city put up in that decade. I have now read roughly fifty budget seasons’ worth of editorials explaining that a Texas city faces hard choices, that the city manager has produced a serious proposal, and that more must be done.
The editorials are almost always right in the sense that nothing in them is false. They are almost always useless in the sense that nothing in them is checkable. “More must be done” is not an analytical claim. It has no denominator, no date, and no way to be wrong.
So let me try to write the version with numbers in it.
The claim I’m making
Dallas is not just experiencing a budget shortfall. Dallas is experiencing the arrival of obligations it created in prior decades, on a schedule that was published, disclosed, and available to anyone who wanted to read it. The city’s own documents have shown for twenty years+ that the fixed claims on the General Fund were growing faster than the General Fund itself, and that the gap would have to be closed eventually by someone who was not in the room when the promises were made.
That structure has specific mechanical features in common with a Ponzi arrangement. I want to be precise about which features, because the analogy is useful exactly to the degree that it is disciplined — and misleading past that point. I’ll do the honest version of both halves below.
Part One: The Cycle, Documented
Set the current numbers down first. The budget under discussion is FY 2027 — the fiscal year beginning October 1, 2026, which the city labels FY 2026-27.
City Manager Kimberly Bizor Tolbert’s recommended FY 2027 budget totals $5.6 billion, built after the city identified a projected General Fund shortfall of $50.9 million. The preliminary General Fund revenue estimate was reduced in a June 18 memorandum to approximately $2.02 billion. The recommendation eliminates 296 budgeted positions, of which roughly 108 are currently occupied. It holds the property tax rate essentially flat — a symbolic tenth-of-a-cent reduction. Council takes a final vote September 16.
Getting to that point required the city to work through FY 2026 with a projected gap that opened at roughly $34 million in May. The drivers were specific and are worth naming rather than summarizing as “rising costs”: employee health benefits ran $13.8 million over budget, other General Fund expenditures ran $16.4 million over, and sales tax came in about $3.8 million short. The city responded with an April hiring freeze on non-public-safety positions, overtime restrictions, a travel and non-essential purchase freeze, and then three mandatory unpaid furlough days for General Fund non-uniform employees on July 10, September 4, and September 28 — with police, fire, EMS, 911, and self-funded enterprise operations exempt.
Now the part that makes it a cycle rather than an event.
In 2011, Dallas held budget hearings on projected deficits that ranged between $41 million and $96 million before settling at roughly $32 million. City Manager Mary Suhm told the public that things were getting slightly better because sales tax was improving a little, while warning that state and federal cuts could undo it. Libraries were, as always, the first thing on the table.
In 2020, city revenues came in $49.6 million below budget. Nearly 500 employees were furloughed. The projected shortfall for the following year ran between $61 million and $101 million. Mayor Eric Johnson said publicly that City Hall carried bloat and fat that could be trimmed and that the bureaucracy needed to share in the pain.
In 2026, the shortfall is $50.9 million, employees are furloughed, libraries have already absorbed layoffs, recreation centers have closed on individual Fridays to save money, and the mayor has issued a July 24 memorandum asking for reduced City Hall spending, more non-tax revenue, and another rate reduction.
Same script. Same vocabulary. Three different city managers, two different mayors, one unchanged structure.
The editorial writers are correct that the song is on repeat. What they never do is ask why the recording keeps playing, or who put it in the machine?
Part Two: The Four Senior Claims
A city budget is not a list of priorities. It is a waterfall. Certain claims are satisfied before anyone gets to decide anything, and the discretionary layer — the part that gets debated in council chambers and covered in the paper — is whatever is left after the senior claims are paid.
Dallas has at least four senior claims, and every one of them is growing faster than the revenue base that services them.
Claim one: the police and fire pension.
The Dallas Police and Fire Pension System carries a total accrued liability of about $5.3 billion against assets of roughly $1.8 billion, leaving an unfunded liability near $3.2 billion and a funded ratio in the low forties. The city contributes 34.5% of pay plus an additional $13 million annually; employees contribute 13.5%. Under the funding structure that prevailed before the most recent revisions, full funding was projected for the year 2105. Read that again. The amortization horizon ran to a date at which no one now living in Dallas will be paying taxes.
The origin story is well documented and is not in dispute: real estate investments made between 2005 and 2009 — ultra-luxury residential in Hawaii, Aspen, and California, and the Museum Tower downtown — went badly, and the Deferred Retirement Option Plan (DROP) credited returns the fund was not earning, which produced a run on the fund in 2016. House Bill 3158 in 2017 reduced the unfunded liability by about $1 billion and reformed governance. It did not solve the problem. It rescheduled it.
Claim two: Proposition U.
In November 2024, Dallas voters approved, by 50.5%, a charter amendment requiring the city to appropriate no less than 50% of any year-over-year revenue increase to the police and fire pension, with the remainder going to police starting pay, and requiring a sworn force of at least 4,000 officers — roughly 900 more than the city had — with that officer-to-population ratio maintained going forward.
Here is the number that should have been the entire editorial.
In FY 2026, the city’s contribution to the pension system was $225.67 million. The year-over-year growth in unrestricted revenue was $30.8 million. The pension contribution was 7.3 times the entire increase in unrestricted revenue. Even measured against total General Fund growth of $61.6 million, the pension contribution was 3.7 times larger.
Proposition U did not create a funding mechanism. It created a mandatory lien on growth in an environment where growth is capped by state law at 3.5% for property tax revenue without voter approval. The Texas Attorney General is now suing the city over the calculation, asserting that projected excess revenue was approximately $220 million while the CFO reported roughly $61 million — which tells you that the mandate’s own denominator is contested, in court, two years after adoption.
Claim three: deferred maintenance.
This is the one I want to spend the most time on, because it is where “more must be done” does its worst work. I started pointing this out in articles I wrote in 1987.
Dallas City Hall — the building I watched open in 1977 — carries approximately $345 million in deferred maintenance. A study this year put the urgent tier at $329 million for the failing roof, outdated electrical, and plumbing, with a full repair-and-update figure of at least $906 million and up to $1 billion over twenty years.
Now trace how it got there:
- The 2012 bond program set aside $400 million for city facilities. City Hall received none of it. Flood control, economic development, and streets took priority.
- The 2017 bond program allocated $7 million to City Hall.
- The 2024 bond program initially requested $61 million for the building. $28 million was advanced and then reallocated to other priorities.
- In May 2026, a council majority declined to support a $1.2 million budget amendment for ADA accessibility compliance in the building.
Four consecutive opportunities. Four deferrals. And the reported number moved from an implied low-single-digit-millions per year of maintenance to $906 million of accumulated need.
This is the mechanism the editorials describe as “the city needs billions for neglected maintenance that will take ten years to resolve.” What they never say — and this is the observation I’ve been making to clients since the Carter administration — is that the ten-year horizon resets every year. It has been ten years away since it was ten years away.
Claim four: debt service on growth-chasing.
The Kay Bailey Hutchison Convention Center rebuild was estimated at $1.9 billion in 2021. It is now $3.3 billion to $3.5 billion. The city took a $1 billion bridge loan from JP Morgan to keep the project moving while it waited to issue $1.5 billion in revenue bonds — an issuance that slipped to fall 2026. The original debt estimate at the time voters approved the 2% hotel occupancy tax increase in November 2022 was up to $2.1 billion. The opening date has moved from 2029 to 2030.
The convention center debt is hotel-tax-secured, not General Fund-secured, and defenders will say correctly that residents don’t pay it. That is true of the debt service and false of the institutional bandwidth, the staff attention, the bridge-loan risk, and the opportunity cost of the city’s borrowing capacity and political capital. It is also false of the assumption underneath it, which is that visitor volume grows forever.
Part Three: The Velocity Problem
The editorials say the problem is getting worse. They are right, and it is measurable. Deferral is not free storage — it accrues at a rate.
| Item | Earlier estimate | Current estimate | Elapsed | Compound annual escalation |
|---|---|---|---|---|
| Police training academy | $140 million (2021) | $227 million (2026) | 5 years | 10.15% |
| Convention center rebuild | $1.9 billion (2021) | $3.5 billion (2026) | 5 years | 13.00% |
| City Hall (bond request → assessed urgent need) | $61 million (2024) | $329 million (2026) | 2 years | scope discovery, not inflation |
Two of these are honest escalation measurements. The third is different in kind and worse: the City Hall figure did not grow at an inflation rate, it grew because nobody had actually assessed the building until the number became unavoidable. That is not a cost increase. That is the discovery that the cost was always there and had never been recognized.
Note the police academy specifically. The 2024 bond designated $50 million for it against a project now estimated at $227 million, leaving a funding gap of $82 million — for a facility whose 2021 estimate was $140 million. Groundbreaking is expected in September 2026, opening in June 2028. The gap is a proposed line item in the very bond package now being debated.
So, 10.5% per year is the number that answers the velocity question. As long as the city’s main revenue growth is capped near 3.5% and its deferral inventory escalates above 10%, the gap between what is owed and what can be paid widens every single year by simple arithmetic, regardless of who is city manager and regardless of how many positions get cut.
You cannot manage your way out of a compounding differential with a hiring freeze.
Part Four: The Number Nobody Reads — Percent Depreciated
Everything in Part Three came from press coverage and council briefings. The most important asset-condition evidence in Dallas is not in either place. It is in Note 8 of the Annual Comprehensive Financial Report, it has been published every year since GASB 34 took effect 27 years ago, and I have never once seen a Dallas editorial reference it. Can anybody tell me if the external auditors or anyone in Accounting/Finance has ever briefed the Council, Commissioners Court or School Board Trustees?
The metric. Take accumulated depreciation and divide it by gross capital assets being depreciated. That is the percent depreciated — the share of the city’s recorded asset base already consumed on the books. In the credit work I’ve done for four decades the working thresholds are roughly: under 40% is a young asset base; 40% to 55% is normal for a mature city; above 60% means reinvestment has fallen behind consumption; above 70% means the capital program is not keeping up and the failures are coming whether or not they’re budgeted.
Here is what the FY 2025 ACFR, audited by Weaver and issued March 24, 2026, actually reports.
| Gross depreciable | Accumulated depreciation | Percent depreciated | |
|---|---|---|---|
| Governmental activities, FY 2025 | $7,760.2 million | $3,415.0 million | 44.01% |
| Governmental activities, FY 2024 | $7,328.2 million | $3,222.2 million | 43.97% |
| Business-type activities, FY 2025 | $10,756.0 million | $4,481.3 million | 41.66% |
| Business-type activities, FY 2024 | $10,372.2 million | $4,252.9 million | 41.00% |
| Combined, FY 2025 | $18,516.1 million | $7,896.4 million | 42.65% |
FY 2025 depreciation and amortization expense was $235.6 million for governmental activities — $184.0 million of actual depreciation plus $51.6 million of amortization — and $241.1 million for business-type activities, of which $160.9 million was Dallas Water Utilities and $43.4 million was Airport Revenues. Total: $476.8 million of capital consumed in one year.
Now the uncomfortable part, and I am going to report it against my own expectation.
I went into this analysis expecting the governmental ratio to be alarming and to find reinvestment running below depreciation. It isn’t, and it doesn’t. Both ratios sit in the normal band for a mature city. Governmental moved four one-hundredths of a point in a year. And on the aggregate reinvestment test — additions to depreciable capital assets against depreciation and amortization expense — Dallas passes comfortably:
- Governmental: $476.1 million of additions against $235.6 million of expense, a ratio of 2.02
- Business-type: $398.0 million against $241.1 million, a ratio of 1.65
By the headline numbers, Dallas has a mid-life asset base and is reinvesting at roughly twice the rate it is consuming. Net capital assets grew from $13.59 billion to $14.46 billion during FY 2025.
That is the finding. And it is exactly the problem.
Because the same city that posts those numbers and ratios cannot afford its own city hall.
Look at what the governmental buildings line actually says:
- Gross historical cost of every building the governmental side of Dallas owns: $1,692.9 million
- Accumulated depreciation: $791.9 million
- Net book value of the entire governmental building portfolio: $901.0 million
The low-end engineering estimate to restore one building — City Hall — is $906 million.
Restoring a single structure costs 100.6% of the recorded net book value of every library, fire station, police station, recreation center, service center, and office the general side of this city owns. Even the urgent-only tier of $329 million is 36.5% of the whole portfolio’s book value.
Those two numbers cannot both be describing the same reality, and the reason they can coexist on the same set of audited statements is the thing I most want readers to understand: historical cost accounting is not a condition assessment. City Hall went into service in 1977 and sits on the books at 1977 construction dollars. The engineering estimate is in 2026 replacement dollars. The ratio between them is not a measure of deterioration. It is a measure of forty-nine years of construction inflation, and no line on any financial statement discloses it.
Where the audited numbers do sound the alarm.
The aggregate hides it; the components do not. Disaggregate governmental activities by class:
| Class | Gross | Accumulated | Percent depreciated |
|---|---|---|---|
| Equipment | $1,186.7 million | $733.9 million | 61.84% |
| Buildings | $1,692.9 million | $791.9 million | 46.78% |
| Infrastructure | $3,538.9 million | $1,411.8 million | 39.89% |
| Improvements other than buildings | $1,027.1 million | $368.2 million | 35.85% |
And on the business-type side, equipment stands at 71.74% depreciated — $747.2 million consumed against $1,041.5 million gross — while utility property, the rate-supported core, sits at a healthy 33.43%.
Then run the reinvestment test on buildings alone rather than on the aggregate:
Governmental buildings received $17.5 million in additions during FY 2025 against $34.0 million in depreciation. A ratio of 0.52. The city consumed its building stock at roughly twice the rate it replenished it, in a single year, in book dollars — and book dollars understate replacement cost by whatever inflation has run since the buildings went up. The real shortfall is a multiple of the $16.5 million nominal gap.
That is the number the editorial should have printed. Not “more must be done.” Zero point five two.
Three reasons the aggregate looks better than the city is.
Construction in progress inflates the picture. Land, artwork, water rights, and CIP are excluded from the depreciation calculation but counted in total capital assets. Business-type CIP stands at $2,194.7 million — 24.9% of net business-type capital assets — and $645.3 million of the $692.7 million in non-depreciable additions during FY 2025 went into it. A convention center under demolition does not make a 1968 water main any younger. Governmental CIP is $614.3 million.
Software is masquerading as capital reinvestment. Governmental amortization was $51.6 million in FY 2025, 21.9% of all governmental depreciation and amortization. Subscription-based IT arrangements grew from $57.1 million to $153.8 million gross in one year — a 169.5% increase. General government amortization alone, at $49.9 million, exceeded depreciation on every building the city owns ($34.0 million). Software subscriptions are being capitalized and amortized on a five-year clock while the roof on Marilla Street goes another year. Both are “additions to capital assets.” Only one keeps the rain out.
Fully depreciated assets in service go silent. An asset past its estimated useful life stops generating depreciation expense. It sits at 100% and contributes nothing further to the trend. Note the implied average useful life embedded in the governmental infrastructure line: $3,538.9 million gross against $64.0 million of annual depreciation implies 55.3 years — longer than the top of the 10-to-50-year range the city’s own Note 1K discloses for governmental infrastructure. That gap is the signature of a stock carrying assets past book life.
The deeper objection: the line isn’t straight.
Everything above accepts the city’s numbers on their own terms. Now I want to attack the method itself, because this is the part that no editorial I can find has ever raised and it is the part that matters most.
Note 1K of the ACFR states the convention plainly: depreciation is computed using the straight-line method over estimated useful lives. Equal cost, allocated equally to every year. Governmental buildings get 10 to 50 years; infrastructure 10 to 50; equipment 3 to 20. Business-type infrastructure gets 50 to 100 years, utility property 33 to 75, water rights 100.
Straight-line is a cost-allocation convention. GASB does not claim it measures condition, and it doesn’t. Physical deterioration is not linear. It is convex — slow, then fast, then catastrophic.
Take a thirty-year building. Here is what the two curves say.
| Year | Straight-line, book | Condition-based, illustrative |
|---|---|---|
| 5 | 16.7% | 2.8% |
| 10 | 33.3% | 11.1% |
| 15 | 50.0% | 25.0% |
| 20 | 66.7% | 44.4% |
| 25 | 83.3% | 69.4% |
| 30 | 100.0% | 100.0% |
Read it by decade instead. Straight-line consumes 33.3% in each of the three decades — by construction. The condition curve consumes 11.1% in the first decade, 33.3% in the second, and 55.6% in the third. The last ten years of a thirty-year building deteriorate at five times the rate of the first ten.
Anyone who has ever owned a roof knows this. A membrane at year eight needs inspection. The same membrane at year twenty-two needs replacement, and if it isn’t replaced it stops being a roof problem — water reaches the decking, then the electrical, then the finishes, and a $2 million roof becomes a $20 million restoration. That is not deferred maintenance compounding at an interest rate. That is a physical cascade, and it is why the police academy went from $140 million to $227 million and City Hall’s assessed urgent need went from a $61 million bond request to $329 million in two years. The escalation rates I computed in Part Three are this curve, expressed in dollars.
Three consequences, and they are severe.
Percent depreciated is a lagging indicator that is most wrong precisely when accuracy matters. In the front half of an asset’s life, straight-line overstates consumption — the book says 33% at year ten when physical loss is nearer 11%. That’s conservative and harmless. In the back half, the relationship reverses in the dimension that counts: book says 83% consumed at year twenty-five, but the cost to restore, measured in current dollars against a historical-cost denominator, is a multiple of the remaining book value. The metric is comforting when you don’t need comfort and misleading when you do.
Straight-line implies a level funding need. The real need is a wave. This is the practical failure. A city reading its own depreciation schedule sees a smooth $235.6 million annual signal for governmental activities and reasonably concludes that steady reinvestment at that rate keeps it whole. The actual requirement is lumpy and back-loaded. A city that funds to the straight-line signal is structurally under-reserved at exactly the moment the wave arrives, and it will experience that shortfall as a surprise — which is precisely how Dallas has experienced every one of the last five budget cycles.
And Dallas built its civic stock in a compressed window, so the waves are correlated. City Hall opened in 1977. Much of the library, recreation center, fire station, and service center inventory dates from the same postwar-through-1980s expansion, as do large portions of the 11,656 paved lane miles and 9,121 miles of water and wastewater mains. Assets built together reach the steep part of the curve together. Straight-line depreciation smooths that correlation into a flat line and hides the single most important fact about the portfolio: the bills do not arrive evenly, they arrive in cohorts.
That is how you get 44.01% depreciated and a $906 million bill for one building in the same audited document. The aggregate ratio is a weighted average of assets sitting at very different points on very different curves. The $476.1 million of FY 2025 additions pulled that average down and made the portfolio look younger — while the buildings that are on the steep part of the curve received $17.5 million.
What the engineers publish instead.
The facilities discipline has a counterpart metric and it has existed for decades: the Facility Condition Index, deferred maintenance divided by current replacement value. Under 5% is good, 5 to 10% fair, 10 to 30% poor, and above 30% is generally treated as past the point where restoration beats replacement. It is denominated in current dollars on both sides, which is exactly what percent depreciated is not.
Dallas does not publish an FCI. It does not publish a facility condition assessment inventory. It commissioned one building’s assessment, got a number with a comma and three groups of digits, and the council responded by declining a $1.2 million ADA amendment.
And the accounting fact underneath all of it.
Depreciation is recognized only in the government-wide statements, on the full accrual basis. It never appears in the governmental fund statements, and it is never appropriated. The FY 2027 budget the council adopts in September, and that the newspaper covers, does not contain a line for the $235.6 million of governmental capital the city consumed last year.
That is how a city posts a balanced budget every year for fifty consecutive years — as Texas law requires — while its building stock is replaced at half the rate it wears out. The balanced budget is a cash statement. The consumption is an accrual fact. They are reported in different documents, on different bases, and nobody is required to reconcile them in public.
The percent depreciated ratio is the only routinely published number that connects them. It is on three pages of a document the city posts every March. It has a clean opinion on it. Nobody reads it — and when someone finally does, the aggregate is reassuring enough to end the inquiry before it reaches the buildings line.
Part Five: Where the Ponzi Analogy Holds — and Where It Doesn’t
I use the comparison deliberately, and I want to be disciplined about it, because a sloppy version invites easy dismissal.
Features Dallas genuinely shares with a Ponzi structure:
Obligations to earlier participants are satisfied from later inflows rather than from returns on the underlying asset. The DROP program is the cleanest case: it credited returns to participants that the fund was not earning, which is definitionally paying earlier participants from the contributions of later ones. When participants recognized this in 2016, they did what participants in such arrangements always do — they ran.
The structure requires continuous growth in the inflow base to remain solvent. Dallas is landlocked. It cannot annex its way to a larger base. It is therefore dependent on appraisal growth and new development for the “new money” the structure requires — which is precisely why the editorial ends on a plea for growth and against NIMBYism. That plea is correct and also revealing: it is an acknowledgment that the arrangement cannot service itself from its existing base.
Solvency is maintained by rolling obligations forward rather than amortizing them. Bridge loans in place of bond issuance. Deferral in place of maintenance. $235.6 million of governmental capital consumed in FY 2025 and never appropriated. And now the proposal to issue $500 million in pension obligation bonds — which the Government Finance Officers Association classifies as high risk precisely because it wagers that investment returns will exceed the interest owed, and which can leave a city carrying both the taxable debt service and the unfunded liability.
The redemption date lies outside every decision-maker’s horizon. Full funding projected for 2105. No council member, no city manager, no editorial writer, and no taxpayer voting today will be present for the settlement.
The disclosure is technically complete and functionally useless. This is the feature I find most damning, and it is the one that distinguishes municipal finance from actual fraud. Nothing here is hidden. It is all in the ACFR, in Pension Review Board filings, in bond official statements, in council briefing decks. But it is never consolidated. There is no single document that says: here is the total fixed claim on the general fund, here is the growth rate of that claim, here is the growth rate of the revenue that services it, and here is the year they cross. Every individual number is public. The aggregate has no owner.
Features it does not share, and I won’t pretend otherwise:
There is no fraud and no intent to deceive. The disclosure is real, the audits are real, the actuaries are real. Dallas has received a clean opinion and a GFOA certificate every year for decades. The people running this system are, in my direct experience, competent and mostly candid.
There is a genuine underlying asset: the taxing power of a large and productive city, which a Ponzi scheme categorically lacks. Dallas has a real claim on real future income.
The participants receive real services, not paper returns. Police respond. Water runs. That is not nothing.
And critically: the failure mode is different. A Ponzi collapses when redemptions exceed inflows and the whole thing stops at once. Dallas will not stop. Texas cities do not default on general obligation debt and do not, as a practical matter, enter bankruptcy.
So what does failure actually look like here?
Not a crash. A hollowing.
The General Fund does not disappear. It converts. It becomes a pass-through for pension contributions, debt service, and a police department, with a thin residue of everything else. Libraries close a branch at a time. Recreation centers shut on Fridays. Pools go from seven days to five to three. Street resurfacing slips from a maintenance program to a bond program to a bond program that doesn’t fund it. Percent depreciated climbs one or two points a year, published every March, unread. The budget stays balanced every single year, as state law requires, and the city that the budget purports to fund quietly ceases to exist as a service organization.
That is already visible in this budget. It is not a forecast.
Part Six: The Business Community Question
I want to be careful and fair here, because this is where I most disagree with how these editorials assign responsibility.
The consistent editorial posture is that councils lack the courage to make hard choices and residents lack the civic maturity to accept development. Both contain truth. Neither is the whole ledger.
Consider where organized civic energy in Dallas actually went over the past decade:
It went into passing a 2% hotel occupancy tax increase for a convention center whose cost estimate has since risen 84.2%.
It went into the 2024 bond campaign — $1.25 billion, ten propositions, 850 projects, endorsed by the sitting mayor and four living former mayors — which allocated $50 million to a police academy needing $227 million and reallocated City Hall’s $28 million elsewhere.
And it went, through Dallas HERO — funded in part by a hotelier and Republican donor — into Proposition U, which constitutionalized a spending mandate that in its first full year required a pension contribution 7.3 times the growth in unrestricted revenue.
Each of those was defended, at the time, as fiscal responsibility. Each of them tightened the structural vise. The convention center added leverage. The bond added debt service while underfunding the thing it was ostensibly for. Proposition U removed the council’s discretion over the marginal dollar precisely when marginal dollars became scarce.
I do not think the people behind these efforts were acting in bad faith. I think they were doing what civic leadership in Texas cities has done for fifty years: funding the visible and assuming the invisible would keep. The pension is invisible. The roof is invisible. A 0.52 reinvestment ratio on buildings is invisible. The academy was invisible until it was 62.1% more expensive.
And now the irony arrives on schedule. The city spent a decade and $3.5 billion building convention and entertainment capacity downtown — and the Mavericks have signed option agreements on 104 acres at the old Valley View Mall site, more than $50 million for land, leaving the American Airlines Center when the lease expires in 2031. The Stars have signed a nonbinding letter of intent with Plano for an arena at the Shops at Willow Bend, reportedly around $1 billion. Both anchors of the downtown entertainment district are leaving downtown.
The Mavericks’ CEO has said publicly that the city manager approached the team over a year ago about the City Hall site — because, in his account, she told them she could not afford to operate the building going forward for the taxpayers.
That is where we are. The city cannot afford to maintain its own seat of government, and its proposed solution was to see whether a basketball team wanted the land.
Part Seven: What an Editorial Could Have Asked
I do not object to newspapers taking positions. I object to positions that cannot be checked. Here is what specificity would look like — questions with answers, on which someone could later be shown to have been right or wrong.
On the aggregate. What is the total annual fixed claim on the General Fund — pension ADC, debt service, Proposition U mandate, and contractual escalators — expressed as a percentage of General Fund revenue, for each of the past ten years and projected ten forward? What year does that percentage reach 100%? The city has every input. It has never published the ratio.
On percent depreciated. I have run FY 2025 above; the city should publish the ten-year trend by asset class, not in aggregate, for both governmental and business-type activities — and set additions beside depreciation for each class. The aggregate is uninformative by construction. The buildings line at 0.52 is the whole story, and it took twenty minutes with Note 8 to find. Every number in that chart is already audited.
On the pension bonds. Proposition C would issue $500 million in pension obligation bonds with estimated repayment exceeding $1 billion. What is the assumed spread between the taxable borrowing rate and the fund’s 6.5% assumed return? At what realized return does the transaction lose money? What happens to the city’s position if the fund earns its actual trailing ten-year return rather than its assumed one?
On the bond package generally. Propositions A and B would issue $460 million in general obligation debt against estimated repayment exceeding $653 million. One council member notes the 2024 program is not a third complete. What is the completion percentage, the cost variance to date on completed projects, and the projected variance on the remainder? Asking voters for new money while the prior program runs over is a specific, answerable claim — not a matter of tone.
On condition, not book value. Commission and publish a Facility Condition Index for the governmental building portfolio — deferred maintenance over current replacement value, both sides in current dollars. Percent depreciated will never answer the question because straight-line depreciation is a cost convention, not a condition measurement. Ask the city what share of its facilities exceeds an FCI of 30%, the threshold past which restoration stops beating replacement.
On deferred maintenance. Publish a register. Every asset, current condition assessment, cost to restore, cost to restore in five years at observed escalation, and the year of assessment. Dallas has never had one. Until it does, “billions in neglected maintenance” is a rhetorical figure, not a management document, and it will still be ten years away in 2036.
On the fire department. The editorial gestures at this and then leaves. The specific question: what is fire department overtime as a percentage of fire salaries, in each of the past ten years, against authorized strength and actual staffed strength by shift? If overtime has not fallen as headcount rose, that is a schedule and minimum-staffing question, and it is answerable in a week from the payroll system.
On the civilian pension. The editorial calls for reform of defined benefit plans. Which plan, which tier, which benefit multiplier, which effective date, and what is the projected liability reduction? “Someone has to have the courage” is not a proposal. A tier change with an actuarial note is a proposal.
Part Eight: The Thing Nobody Says
Here is my actual conclusion, and it is not the one the editorial reaches.
Tolbert’s FY 2027 budget is a competent piece of work. Cutting 296 positions, roughly 108 of them occupied, in a political environment that punishes exactly that, is a real act. She deserves the credit she’s getting.
It also does not matter very much.
If the fixed claims on the general fund compound at 10% and the revenue that services them is capped near 3.5%, the annual exercise of finding $50.9 million is not a solution. It is a payment. Every year the payment gets larger and the thing being paid for gets smaller, and the budget balances every single time, and the newspaper writes that the city manager has produced a serious proposal and more must be done.
The recognition event — the moment the structure is priced honestly — does not arrive as a bankruptcy. It arrives as a bond rating action, or a pension board demanding contributions the council cannot appropriate, or a court reading Proposition U the way the Attorney General reads it, or a fifty-year-old water main under Ross Avenue deciding the question on its own schedule. Or simply the day residents notice that they are paying near-peak Texas municipal tax rates for a library system that is open four days a week.
We are closer to that day than the editorial suggests, and the reason is not a lack of courage in the council chamber. It is that the arithmetic was published, was audited, was true, and was ignored by everyone including the people who write about it — for fifty years, in language calibrated to sound authoritative and commit to nothing.
I was there in 1972. I watched the building go up in 1977. It is still on the books at what it cost to build then — and the net book value of every building this city owns, all of them together, is $901.0 million against a $906 million estimate to fix that one.
The numbers were legible all along. They are legible now. They are on page 72 of the ACFR.
Sources: City of Dallas FY 2026-27 recommended budget materials and council briefings; City of Dallas Annual Comprehensive Financial Report, Note 8 (Capital Assets) and Management’s Discussion and Analysis; City of Dallas Government Affairs pension funding materials; Texas Pension Review Board plan data; KERA News reporting on the proposed 2026 bond election and City Hall deferred maintenance; Dallas Observer, D Magazine, WFAA, NBC 5, CBS Texas, and Bond Buyer reporting; Dallas city charter Chapter XI as amended November 5, 2024.
An overwhelming analysis! And consider that Dallas is not alone, as this is facing the ninth largest City in this country. What about the top eight and then the next 20?