Health Disasters and Local Government Finance: City of Dallas Budget Strategies During the COVID-19 Pandemic

The strong performance of the city of Dallas during the past decade has been bolstered by a diverse economic base of finance, information technology, defense, and construction industries that have raised the taxable assessed property values in Dallas significantly since 2012. Due in part to the strength of this base, Dallas experienced shorter durations of unemployment during COVID-19 than in previous recessions and was able to rely on standard recession strategies to deal with changes in sales tax revenue caused by the pandemic. The main lessons from the Dallas experience are to use periods of growth to build fund balances and to rely on income-inelastic revenue to balance the general fund during adverse events. The Dallas case also illustrates the importance of making strategic investments to reduce debt and of ensuring funding for pensions and other postemployment benefits and obligations, strategies that city officials had relied on less in the years leading up to the pandemic. Less strategically, the city also relied on significant CARES Act contributions and employee furloughs across many departments.