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Council hears four options to manage DeSoto debt-service tax rate
Summary
City advisers told the council the preliminary Dallas CAD valuation rose roughly 13% and outlined four approaches to the I&S (debt-service) tax rate: let it fall, remove transfers that buy it down, prepay debt, or issue a short-term tax note. Council asked for follow-up financial detail.
Andre Ayala, a municipal finance adviser with Hilltop Securities, told the DeSoto City Council the city faces a choice as it prepares the fiscal 2027 budget after Dallas County provided a preliminary taxable value. "They are telling us that preliminarily ... is roughly $9,000,000,000," Ayala said, a figure he said represented about a 13% increase over last year.
Ayala explained four discrete options for the I&S (interest and sinking) or debt-service tax rate. He said the current I&S rate, adopted last year, is 0.1825 ("18.25 cents"). If values hold and the council "do[es] nothing," he said, the debt-service tax rate could drop to about 0.1221 (about 12.21¢). Council could instead: eliminate internal transfers that currently lower the rate; maintain the current rate and use surplus collections to prepay roughly $5.3 million of bonds (Ayala estimated about $730,000 in future interest savings); or issue a short-term tax note to accelerate limited projects and pay it off when next winter's property-tax revenue arrives.
Finance Director Lakita Sutton framed the discussion as part of the FY2027 budget process and noted the city's long-term CIP: "We do have an established CIP program with future capital financing needs," she said. Councilmembers pressed staff and the advisers for plain-language examples of outcomes for residents, how the I&S choices would interact with the maintenance-and-operations (M&O) tax cap, and how any recommendations would be reflected in next year's bond or budget planning.
Mayor Pro Tem Crystal Chisholm and Councilmember Perrette Parker expressed interest in using surplus collections to pay down debt and in preserving long-term stability for future councils. Ayala and staff said certified values in July and additional budget work will narrow the assumptions; staff will return with more financial illustrations. The council did not adopt a final course of action at the meeting and directed further analysis.
