City won't raise our taxes directly, only indirectly

The City of Dallas is working this shell game on Dallas taxpayers called PILOT, which stands for Payment In Lieu of Taxes. The city charges utilities such as TXU and the cable companies a franchise tax because of the fact these utilities have to dig up city streets and their vehicles are constantly traveling on and wearing down those same streets. Dallas Water Utilities, however, does not pay a franchise tax because it is part of the city. PILOT, therefore, is the money Dallas Water Utilities pays the city instead of the franchise taxes other utilities pay.

PILOT is a feature of the city manager's proposed budget for the next fiscal year. The money from PILOT is being used for new business development. Last night at District 3 council member Dave Neumann's budget town hall meeting at Kiest Park I asked Mr. Neumann to convince me that PILOT wasn't simply an example of the city taking money out its left pocket and putting it in the right pocket. His first reaction was "Well, to a large degree that's exactly what it is," but then tried to justify it by claiming that because Dallas Water Utilities is an enterprise fund (meaning essentially that it is self-supporting -- what it spends comes solely from the money it charges households and other municipalities for water and not from tax dollars). He also used some strange logic to suggest that Dallas Water Utilities, because it is an enterprise fund, is really not a part of city government (an argument that the city manager, who appoints the director of the Water Department, might disagree with). I argued that the Aviation Department is also an enterprise fund and the city is not forcing that department to make any payments in lieu of taxes. He tried to tell me, yes, but the private businesses on airport properties are taxed, which I suggested was a different subject altogether and had nothing to do with the Aviation Department itself, but only that airport property was not a tax-free zone.

But here's the real point. In another section of the budget, there are recommendations to increase the water rates. I am convinced a water rate increase is justified -- our water infrastructure is dangerously aged and I want water coming out of my faucets and not flooding city streets because of main breaks. But I keep wondering how much of that rate increase is going to reimburse Dallas Water Utilities for those payments in lieu of taxes. Because DWU is an enterprise fund, some of that increase must be going to that added expense.

So when the city claims it's not raising our property taxes to fund this upcoming budget, it is telling the truth. But it can't claim it's not indirectly raising our taxes, it is simply sneaking the tax increase as part of the water rate increase.