Dallas Faces $34M Budget Shortfall Enacts Hiring Freeze

Dallas is reeling in spending after City Manager Kimberly Bizor Tolbert announced the city faces a $34 million budget shortfall.

The city enacted a hiring freeze and suspended travel and overtime for non-uniformed workers in an effort to reduce expenses beyond “mission critical needs,” the Dallas Business Journal reported.

The projected deficit comes as the city weighs the future of its 47-year-old City Hall building, which was designed by renowned architect I.M. Pei. A recent report compiled by a group that includes CBRE and the Dallas Economic Development Corporation estimated it would cost $1.4 billion to renovate the building. Council members and residents have expressed skepticism about the report, sharing concerns that the number was inflated so the building would be demolished and the site could be used for a new Dallas Mavericks arena.

Efforts to tighten the belt could have implications for departments crucial to the real estate development process, like the city’s Planning and Development Department and the Office of Economic Development.

Nearly half of the $34 million gap ($16.4 million) is being attributed to rising police and fire overtime costs. The announcement comes two months after Attorney General Ken Paxton sued the city, claiming it’s not spending enough on the police department, as mandated by Proposition U, according to the outlet.

The HERO amendments, which were championed by Ashford Group CEO Monty Bennett, passed in November 2024. Proposition U requires the city to spend half of all new revenue on police and fire pensions. It also calls for the city to employ a minimum of 4,000 police officers. At the time of the election, the city needed to hire an additional 900 officers to reach this threshold.The budget shortfall also includes a $3.8 million gap in sales tax revenue and a $13.8 million employee health fund overage, caused by rising health care costs, according to the Dallas Morning News.