The credit rating firm, Moody's, has lowered its outlook for the city of Dallas as a result of voters passing Proposition U earlier this month. The measure passed 50.5% to 49.5% and requires the city to hire 900 additional police officers while dedicating half of new revenue to the police and fire pension funds.
Moody's has not lowered the city's credit rating, but in its outlook, the agency says Dallas will face "budget challenges given required increases to its pension plans, growing public safety expenses, and reduced financial flexibility."
Moody's does say Dallas' credit profile "benefits from a strong and diverse
economy that continues to grow at a pace that exceeds that of the nation." The agency also credits Dallas with adopting a plan in September to increase pension contributions annually to make the funds solvent within 30 years.
"The additional contributions are a positive step given the plans are not currently projected to be funded for several decades. However, the increased contributions are not expected to meet the tread water level and the plans' cash flow remains very weak," Moody's says.
Moody's says the mandates in Proposition U will become a "key focus" in future reviews. Interim City Manager Kim Tolbert sent a memo to council members saying next year's budget includes a funding increase, and the revised credit outlook is not a downgrade. Instead, she says the outlook is an "indication of an expected direction of the credit rating's movement to be reviewed over the next 18-24 months."
"The City of Dallas remains committed to upholding public safety and ensuring that resources are allocated in a manner that supports the health, safety, and general welfare of its residents," the city wrote in a statement Tuesday.
LISTEN on the Audacy App
Tell your Smart Speaker to "PLAY 1080 KRLD"
Sign Up to receive our KRLD Insider Newsletter for more news
Follow us on Facebook | Twitter | Instagram | YouTube
