Does Your City Balance Its Budget?
Using Strong Town's Finance Decoder, we analyzed 10 years of financial reports for the City of Dallas and eight of its suburbs. Here's what we found.
Editor’s Note: This article was researched and written by a volunteer member of our community. We’re sharing it with Dallas Urbanists subscribers because it offers valuable insights that may help you better understand your own neighborhood.
Cities provide many things that affect daily life: parks and recreation, public safety, infrastructure and development, transportation, and other things people may take for granted. These services make your city a safe and maybe even fun place to live, but a city needs tax revenue to pay those bills, so it’s important that your city has its finances in order.
There has been a lot of discussion lately about the financial struggles of rapid low-density development, especially in DFW, where it seems endless. But I wanted to see this in practice, so I took 10 years of financial reports and filled out the Strong Towns Finance Decoder on several Dallas-area cities to see how we’re doing on some main metrics.
The result? The City of Dallas is in massive debt but improving rapidly, Carrollton and Farmers Branch appear to be in a great spot, and Plano is the only city in this group to get worse over the time period.
Let’s dive in.
Dallas holds the most debt, which it’s steadily paying down
In this first chart, the vertical axis chart shows how many years of income it would take to pay off all debts if every dollar went to debt repayment.
There’s a mess of lines in there, but the obvious thing to notice is that Dallas is in a lot of debt. Dallas’s well-known pension deficit is almost half of this, but even with zero pension debt, Dallas would still be the least sustainable in this category. This comes at a real cost—Dallas recently closed several libraries and public pools because there wasn’t enough money to maintain them.
That said, the city is certainly heading in the right direction by decreasing its debt ratio for nine years straight.
Plano is the only city whose finances are getting worse over time
This ratio shows whether the city has enough liquid financial resources to cover what it owes. A ratio below 1 means it wouldn’t be able to pay off its liabilities using only its financial assets—a sign of financial stress. Liquidity is important because it lets the city pay for unexpected expenses without too many negative effects on residents.
Four cities jump out to me on this chart:
Carrollton and Farmers Branch are the only cities that could pay off their debts immediately if necessary.
Plano is the only city to decline.
Dallas is low, but the gap between it and the others isn’t as large as in the previous metric.
This is the value of all the city’s assets (including infrastructure) divided by its total liabilities. A ratio above 1 means your city is solvent; below 1 means it owes more than it owns and is insolvent.
Dallas dipped slightly below this line in 2016 and 2017, but otherwise all cities have remained solvent.
In the previous metric (FIGURE 2: Financial Assets-to-Total Liabilities), Plano went from 1st place to 6th. In this metric (FIGURE 3: Total Assets-to-Total Liabilities), here they went from 1st to 3rd.
These, along with their Net Debt-to-Total Revenues (FIGURE 1), show that Plano has a lot of valuable assets but not as much in terms of revenue and liquidity.
Unlike most cities, Garland, Richardson, and Farmers Branch have kept up maintenance
This is the current value of the city’s physical assets compared to their original cost, it indicates how well the city is maintaining its infrastructure.
The cities are in a tight band between 45% and 65% but there are differences to pick out.
Most cities have seen slight declines but Garland, Richardson, and Farmers Branch buck the trend by improving their infrastructure in the last 10 years.
Dallas and Irving sit above the rest with high valued assets.
Rowlett tends to be the most dependent on outside funding
This shows the share of the city’s income that comes from state or federal aid. It can also include one-time payments from developers for infrastructure like roads or utilities in a new development. High dependency on outside funding makes the city vulnerable to political or economic shifts beyond its control.
The large spikes for Irving, Farmers Branch, and Rowlett mostly correlate with payments from developers after finishing a project (e.g., a new subdivision). These infusions of cash are a great opportunity, but they are difficult to come by once the city is fully built out.
Analysis per city
While seeing the data year over year is the most comprehensive way to view things, following nine cities on these charts can be difficult. So I broke down the current state of things:
And here is what’s changed in the last ten years:
Addison
While doing comfortably well, they’re not investing as much as they used to. This makes their slow growth seem stagnant by comparison. Smaller cities see more swings in their data than big cities, so it’s possible the several ongoing infrastructure projects will significantly increase their asset values.
Carrollton
Of the nine cities analyzed, Carrollton was the best performer, but not without caveats. They let their infrastructure age while they paid off their debts and built up a cushion. They are built out and fairly low density. This means their current sales tax base is strong and they have room for increased density through redevelopment as needed.
Dallas
Dallas is still up to its neck in debt, but the steady progress since 2016 is laudable. The city has a lot of high-value assets, but they either weren’t being utilized or were invested in things that give poor returns. Revenue is consistently increasing faster than inflation, and liabilities are increasing more slowly.
Will the recent HERO amendments hurt Dallas’s ability to control their finances or is that just a drop in the bucket when looking at their massive debt?
Dallas is its own suburb. Even though it’s the oldest and most central city, Dallas has a similar or lower average population density and revenue per acre compared to its actual suburbs. The several recent regulatory changes that make it easier to build dense housing should allow for further revenue gains.
If they keep up this rate, they’ll likely pass one of the other cities in five years.
Farmers Branch
Farmers Branch is the runner-up but through a very different method to Carrollton.
Instead of letting infrastructure age to improve the balance books, Farmers Branch has been increasing residential density and improving in all metrics. According to their financial documents, a majority of the increase is due to the Mercer Crossing development. It contains many detached houses, townhouses, and some apartments near their southwestern border. This was the last large plot of vacant land in Farmers Branch.
While the density on those new neighborhoods are higher than most of their existing ones, it remains to be seen if the city is in a place to maintain their good financial standing.
Garland
As a larger and older city (relative to its peers), it’s not rich, but it’s stable. They’ve been borrowing to invest in their infrastructure, making the biggest capital asset gains out of all the cities.
The infrastructure expenses haven’t changed their overall finances too much, so this looks like a normal cycle of upgrading infrastructure before a period of paying off that debt.
Irving
Irving has the highest-value infrastructure along with Dallas.
Recently, they’ve been letting their infrastructure age, like Carrollton, to try to pay off their debt. They have the highest interest payments, but the debt-to-assets ratio isn’t too bad. This indicates that they borrowed a lot to build a lot. This strategy could be risky, but it’s been working so far. They just need to hold on for several more years until those debt payments become more manageable.
Plano
Plano went from best performer to middle of the pack in 10 years. That doesn’t sound so bad, but if they repeat that for the next 10 years, they’ll be bankrupt.
Plano’s assets are already older, so they don’t have the luxury of letting them age while paying off debt like Carrollton, Dallas, or Irving.
Wealthy residents don’t always make for wealthy cities. Despite having the second-highest household income of the group ($108k vs. Rowlett’s $113k), their taxation and development policies have lowered their municipal budgets compared to their peers.
Their financial report says their weaker current position is mainly due to a senior tax freeze. The policy encourages seniors to stay in place and new seniors to move in. This means the average age of the city is going up, and they get less and less revenue every year. They need to raise revenue, so it’s a good thing they bumped up the tax rate next year for the first time in 16 years.
The poor trajectory is likely a root cause of their conflicts with DART and the May 2026 pullout election. The future is in the hands of Plano voters: will the city be forced to fix its past mistakes, or will money be taken from transit in an attempt to patch the holes?
Richardson
Richardson is in the bottom third in all the stats we’ve looked at, but they’re improving.
They are the only city other than Farmers Branch to improve on all metrics, largely by having the highest revenue increase of the group.
Highways 75 and PGBT take up a significant portion of their land, but they also have a lot of development potential around their four Red/Orange Line stations plus the new UTD Silver Line station.
Rowlett
It’s hard to compare Rowlett to these other cities because it has so much greenfield.
They let their infrastructure age to make huge leaps in all other metrics. But now they’re in last place in infrastructure, so we’ll see how their numbers look when they have to reinvest in it.
A significant portion of their recent revenue has come from external transfers, reaching as high as one-third in 2020. Some of this money is state and federal grants, but most of it is from developers after they finish a new subdivision. This could be what Strong Towns calls the “growth ponzi scheme,” where cities receive large amounts of cash up front but are stuck with infrastructure they can’t maintain.
Conclusion
Cities can function with low densities as long as they have low levels of service, high taxes, or significant sales tax revenue. The problems really come when cities think they can have it all.
Sources: All data compiled from Annual Comprehensive Financial Reports (ACFR) from each city and put into this spreadsheet.
When you say “most of it is from developers after they finish a new subdivision,” what are you basing that on? I’m curious what makes you think that’s true for Rowlett specifically.