Dallas city employees warned furloughs, layoffs could be coming because of millions in losses over coronavirus

Dallas anticipates a $25 million shortfall in the current budget and dramatic cuts in the next fiscal year as it braces for anywhere from $73 million to $134 million in losses because of the coronavirus pandemic.

City officials said they still don’t know the extent of the shortfall, which will partly rely on property tax valuations at the end of the year. The city will need to balance the $3.6 billion budget before the current fiscal year ends in September and make drastic cuts the following year.

City Manager T.C. Broadnax told city employees in a letter Thursday that their jobs are safe until May 4. Nonessential city employees are either working from home or on paid leave until then.

But after that, city employees could face furloughs or layoffs.

“I know this is not the news any of you want to hear, but it’s the reality we’re facing right now,” Broadnax wrote. “I can assure you that we will continue to scrub the budget to minimize, as best possible, both the short and long-term impact on you.”

Broadnax said the city will also need to use $16 million from its emergency reserves to cover damage from the October tornadoes, one of which tore through northwest Dallas. The Federal Emergency Management Agency rejected Texas’ request for a major disaster declaration, which would’ve allowed the city to be reimbursed for 75% of its costs. The state has appealed the decision.

Dallas earlier this week received $234.4 million from the Treasury Department to provide relief for the coronavirus, but that money is limited to immediate expenses. The city currently can’t use those dollars to make up for lost revenue or expenses beyond this year.

City officials said they’re pushing for more flexibility on how they can use that federal relief.

City Council member Jennifer Staubach Gates, who heads the Government Performance and Financial Management Committee, said she never expected to have to worry about continuing to provide basic city services this year.

“We’re going to pull back, and we’ve got to be conservative with the way we’re spending money,” Gates said.

The U.S. Conference of Mayors and National League of Cities said in a news release last week that 88% of cities surveyed expect a revenue shortfall this year because of the spread of COVID-19, and many of them expect to furlough employees.

Christy McFarland, director of research at the National League of Cities, also has said that the immediate coronavirus expenses are only “a small share of what cities are dealing with right now when it comes to fiscal impact.”

Council member Lee Kleinman, who represents part of northern Dallas, said the city made the mistake of bloating the budget after the 2009 recession and will now have to make painful cuts because of it.

He said the city will face cuts across the board, including in public safety departments that have the largest chunk of the city’s general fund. Before the pandemic hit the city, Dallas had been $4 million over budget because of successful retention and recruitment efforts at the Dallas Police Department.

“It is not a pretty picture, to say the least,” Kleinman said. “You can’t find the savings from the bottom up. You just can’t. You won’t get enough.”

Gates feels differently, and said poor economic conditions also tend to coincide with a spike in crime.

“It’s not the time to back off on public safety,” she said.

Broadnax and Chief Financial Officer Elizabeth Reich plan to talk to the council about budget impacts on May 6. The city manager is expected to present recommendations for a balanced budget Aug. 11.

Mayor Eric Johnson said in a statement Thursday that he’s been talking to Dallas’ congressional delegation about the need for more federal resources and flexibility. He said he expected city revenue would take a significant hit.

“I will also strongly advocate for the dedicated city employees who actually deliver our city’s core services and equity for our residents," he said.