TX: How do state laws affect DART and public transportation funding in North Texas?

As cities have reconsidered their future in Dallas Area Rapid Transit during the past several months, the debates over funding the public transit agency have laid bare the financial pressures on city governments and the options some would consider to alleviate the stress.

Nearly half of the agency’s member cities sought to cut ties with DART this year. Compromises on the agency’s funding, governance and service convinced several cities to stay in the system, and some reforms will now be considered in the Legislature. But three of DART’s 13 member cities will still put membership to a vote in May.

When cities began to vote on DART elections, it was a “perfect storm and a perfect challenge for the region,” said Todd Little, executive director of the North Central Texas Council of Governments. Cities strapped for cash realized they had a way out as the region prepares to host the World Cup.

But there’s more to the North Texas transit crisis than meets the eye.

Many leaders have pointed to state laws that they say have contributed to DART’s peril by disincentivizing other cities from joining the agency, financially straining cities and restricting local control.

Regional leaders say the issue is all the more important as North Texas’ population is expected to grow from 8 million to 12 million residents by 2050. That spike will be felt on the roads, said Randy Machemehl, a professor researching transportation at the University of Texas at Austin.

“Congestion in Texas cities is growing daily,” he said. “It’s getting worse, and we need to do anything we can to at least somewhat reduce congestion.”

It will be in Austin, the same place DART was born in 1983, where the agency now seeks its lifeline in reform through state law. Walt Humann, credited as the father of DART, said for transit to expand in the region, state leaders need to step in to help cities and incentivize supporting transportation.

“It’s not going to happen unless we get the Legislature and the governor of Texas to buy into public transit,” Humann said. “We need a viable alternative to urban spread, pollution and congestion on our highways.”

‘Turning off a light switch’

In 1983, DART was created by state law, and residents in over a dozen North Texas cities elected to be part of the new transit agency and contribute a 1% sales tax to fund it.

“There was really no competition for that one cent,” said Gary Slagel, former DART board chair. “It was put aside just for transportation authorities, and that worked out well.”

Starting in the late ’80s and early ’90s, the Legislature allowed cities to use sales tax on economic development and other projects, such as public safety or parks.

“That was like turning off a light switch,” Humann said. “After that, the Friscos weren’t going to spend money on transportation. They can spend it on building a park or a new city hall or what have you.”

Highland Park Mayor Will Beecherl wrote in a letter to the editor that the move hurt DART cities.

“The funding imbalance was fixed; non-DART cities had an economic advantage over DART member cities that they would never give up,” Beecherl wrote. “As a result, no new cities have joined DART in more than four decades.”

DART has withstood several withdrawal elections, and in 1989, two cities successfully left the agency — Coppell and Flower Mound.

“Once you get that extra sales tax, it’s really difficult to say, OK, now I’m going to … join a transit authority,’” Slagel said.

It costs more now to maintain city infrastructure, he said, and cities often resort to large bond packages.

“Cities are older, 40 years older … than they were when DART was voted upon,” Slagel said. “Those cities now have expanded and grown and taken advantage of economic development initiatives.”

Michael Morris, transportation director of the NCTCOG, which has lent a hand to help DART’s funding crisis, is not surprised that cities that have committed a 1-cent sales tax to transportation feel a funding pinch in a state that is “not very supportive of local control.”

A cap on tax increases

In 2019, the Legislature created a law that caps property tax increases without voter approval at 3.5% — the previous cap was 8%.

“Cities and counties in our region are looking for ways to enhance or receive more revenue dollars that they cannot collect on their property taxes,” Little said.

That included looking at ways to maximize sales tax — “the only meaningful flexible revenue source” left for cities with growing public safety and infrastructure needs, Beecherl wrote.

“Dedicating half of that capacity to DART significantly constrains the town’s ability to meet essential local needs for its residents,” he wrote.

Plano has felt the strain. The City Council voted last year to raise the property tax rate for the first time in 16 years, citing the need for emergency funds, economic development investments and to update infrastructure. The city also passed the largest bond referendum in its history last year to address aging infrastructure.

This strain contributes to why cities have asked the agency for a quarter of its sales tax back, a chunk of money DART is trying to replicate in a multifaceted plan to offer relief to cities.

The funding reform plan includes returning 10% of sales tax contributions to all member cities over six years with the help of the Regional Transportation Council.

“If [cities] could somehow come to the table and negotiate a deal where they could get back some of their sales tax,” Little said, “They could reap the benefit of future growth in their city.”

DART’s future in Austin

DART will ask state lawmakers to consider reforming DART’s governance structure to give more voting power to smaller cities. The agency will also ask lawmakers to establish a regional rail authority that would combine several systems and find a new source of revenue for DART, such as a vehicle registration fee.

Some past attempts to reform DART in the Legislature have failed, but transportation leaders are hopeful that returning to Austin as a unified front after coming to an agreement on solutions at home will prove successful.

“That’s what we continuously heard from the Legislature in the past session, was to solve these problems locally,” DART Chair Randall Bryant said.

Slagel is hopeful this time will be different.

“If we’re working together with our cities and with the local legislators, I think we have a better chance than we’ve had for a long time,” Slagel said.

Beecherl wrote that the agency’s structure limits DART’s ability to reinvest in a truly regional system, “leaving its 13 member cities shouldering a disproportionate share of the cost.”

He said he hopes the Legislature will work to create a regional transit authority and an equitable, regionwide funding model.

Irving Mayor Rick Stopfer, who voted that his city should cancel its election to leave DART, said there’s a lot of work to be done ironing out the details before heading to Austin.

“We’re far from having an outcome,” he said. “All we’ve agreed upon is a couple points that really need to be worked on.”

The lesson, Morris said, is that constraints breed innovation.

“We need to build a better model,” he said. He’s optimistic that the Legislature can help accomplish that.

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