Motives for Defunding DART, Explained - Part 2
That money has to go somewhere.
In the last writeup, we looked into the mechanisms and pressures that affect our local property tax rate. It’s a fraught political issue that we’ll need to grapple with in the coming years, if not decades. Monetary relief to the public is not necessarily a bad thing, but if it’s done without proper balance on the other end, it can lead to insolvency.
What if They Actually Vote to Leave?
Let’s say, theoretically, the cities succeed in breaking away from DART. Or they convince the Legislature to reduce DART’s sales tax commitment to 0.5%. What would they use it for? Looking into the financials of non-DART cities may offer us a clue. What we can find, typically, is that cities use this additional 1% to fund Economic Development Corporations (EDC), Infrastructure Maintenance Funds (IMF), Recreation and Development Corporations (RDC), Crime Control and Prevention Districts (CCPD), or direct property tax relief.
Economic Development Corporations
Economic Development Corporations are non-profits that are created by cities to finance new and expanded business enterprises. It provides greater flexibility than what a typical government can do, as they are technically a 501(c)(3) non-profit with a board of directors with some city oversight. These entities are typically unbound by the typical legal restrictions of a city or political subdivision. For example, EDCs are not subject to Local Government Code 171, governing conflicts of interests of officers. Nor is it subject to Chapter 2258, which is the prevailing wage law, or chapter 272, which governs the purchase or sale of property to prevent conflicts of interest. In addition to this, they are also a bond-issuing entity. There are instances where a city creates an EDC without sales tax backing, but they are few and without a dedicated source of revenue, their ability is curtailed.
An EDC can do a lot of things to promote business development. The Texas Comptroller lists the type of expenditures an EDC can fund on their website. In general, an EDC can pay for land, buildings, equipment, costs, infrastructure, and improvements for the types of projects listed on the site. EDCs can also issue loans with interest to these businesses and operate public facilities such as arenas and stadiums, taking in these proceeds as revenue. Long story short, cities can defray business expenses for corporations through the EDC.
One of the most famous examples of this is Arlington, with its many stadiums and arenas. As a funny sidenote - in 1996, Jerry Jones financed an anti-DART campaign to free up the 1-cent sales tax to renovate Texas Stadium and add a retractable roof. When the measure failed and Irving stayed in DART, the Cowboys moved to Arlington. In a more pedestrian example, Celina’s EDC provided economic incentives to bring in a Wal-Mart and Costco.
Infrastructure Maintenance Fund
This one is self-explanatory. Some cities will dedicate some of its sales tax to a fund for street, sewer, water, facility improvements, renovation, and maintenance, taking the pressure off of their general fund.
Recreation and Development Corporation
Another self-explanatory non-profit - this entity uses dedicated sales tax funds (0.25% - 0.5%) to create a non-profit to finance parks and recreation buildout, maintenance, and operations. Their scope may also include libraries, amateur athletic facilities, trails, medians, and green spaces. This non-profit also has the power to issue bonds backed by this sales tax revenue. Revenue from operations go back into the RDC as funds. The RDC is another form of an EDC, but with a more narrow scope in its purpose.
Crime Control and Prevention District
This is a voter-approved dedication of sales tax funds to supplement existing police budgets, by paying for vehicles/equipment, training costs, gang prevention programs, school resource officers, and other associated police and safety costs approved by the board of directors.
Property Tax Relief
Cities, counties, and hospital districts are authorized to reduce property taxes via sales tax. This option is out of reach for cities that are within the boundaries of a transit authority and does not impose a sales tax to fund a municipal transit department. The pull-out cities will likely not be eligible.
NOTHING.
One option that no one really talks about, but a real possibility, is that nothing will be done with the extra 1%. Once the DART debts are paid off, another vote needs to be taken to increase the sales tax from 7.25% to 8.25%. It is very possible that the residents may choose to enjoy their lower sales tax, with many arguments being published supporting it, saying that it will increase economic activity in their city. In that case, the city won’t get their extra revenue, and will have to fund their own public transportation system out of their ever-shrinking budgets (if they choose to).
The EDC is the Prize
Out of the options above, the key item at play is the EDC. Mayors of DART cities have been watching non-transit cities like Frisco and Arlington utilize their EDCs to entice corporations with not a small amount of jealousy. But one thing to consider is that once the 10-year lease is up, a corporation will always ask for more incentives and search for the highest bidder while the city is trying to use their EDC to get other companies to move in. That’s an additional cost that a city may not be able to afford. If the business leaves, what happens to the infrastructure and commercial buildings that may have been custom built to accommodate them?
EDCs may create short-term gains, be it a sales tax boost, job creation (although in many cases, they also drive out more, higher paying local jobs than the lower-paid jobs they create), or photo opportunities for politicians. But when the corporations leave in the never-ending quest for cheaper costs and higher profits, cities are left with a husk they will need to contend with as it continues to drain tax dollars with its upkeep. When it gets to that point, one might think that it would have been a better idea to spend the money on improvements that makes a city a better place to live, move, and work in, to promote organic development not reliant on payouts to corporations. After all, infrastructure that improves the day-to-day lives of residents is far longer lasting than any corporate headquarters.
Well, Why Can’t We Get More Money?
In the next writeup, we will discuss transit funding. Laws were written to keep DART’s funding sources inflexible and wholly dependent on the sales tax to remain viable. We’ll also look at how other transit agencies shore up their revenues in comparison and how it affects them.
The devil works hard, but David Lethe works harder.
Notice that he sources basically none of his claims because the context generally weakens his argument.
For example, the rise in priority response time he cites can be found here: https://dart.org/about/about-dart/key-performance-indicator under "Security Performance". While priority response time is up vs November 2025, Group A offenses and arrests are down by a few dozen each. It is also possible that many officers were on holiday leave which may have affected staffing as every industry is during the holidays. Regardless, response time is still lower than it was in DEC 2024 and has not exceeded the threshold this year at all. Surely David supports having well rested police officers who get to see their families.
He also doesn't mention that Arlington is also raising their fares. Rides will cost $3-$8 effective this march, and paratransit rides are going up 50% to $3 each way and they are reducing service to city limits only. DART paratransit is more expensive at 4$ a ride, but covers 13 cities and a 1.5 mile radius outside DART service area, far better access than arlington. DART Day passes have not risen past 6$ and regional passes are decreasing in price from $12 to 9$ this year.
The argument from DATA has never been that Plano doesn't deserve more service, it absolutely does for the amount of money it pays into the system. That said, it is being corrected via the GMP, where Plano will be getting tens of millions of dollars in refunds at the cost of some bus routes that they say they don't want anyways. If there is less service in Plano, one might want to look inward at Plano leadership for pushing DART defunding legislation at the last session.
Strong breakdown of the EDC dynamics. The point about corporations playing cities against each other for incentives is key here, especially when you factor in the 10-year lease cycles. Saw that pattern play out in similar debates in Austin where companies leveraged better deals elsewere after initial incentives expired. The DART funding inflexibility creates a trap tho, cities can't diversify revenue even if they wanted better transit witout a full legislative overhaul.