Dallas Audit Finds $4.9M in Arts Funding Lacks Proof of Overnight Visitors

City unable to document that hotel tax-funded cultural programs met state requirements to attract out-of-town guests.

Apr. 8, 2026 at 3:37pm

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A recent audit of the Dallas Office of Arts and Culture found that the city could not provide documentation proving that around $4.9 million in hotel occupancy tax reimbursements for cultural programs actually attracted overnight visitors as required by Texas law. The audit cited missing receipts, limited ticketing data, and a lack of formal verification processes, warning that the city may have difficulty defending the expenditures if scrutinized.

Why it matters

Under Texas law, municipal hotel tax revenue can only be spent on programs that both promote tourism and support the local hotel and convention industry. The audit raises concerns that Dallas may have misused nearly $5 million in hotel tax funds, exposing the city to potential repayment demands or reduced future disbursements from the state if it cannot prove the money was spent properly.

The details

The internal audit found that the Dallas Office of Arts and Culture received $8.9 million in hotel occupancy tax reimbursements in fiscal year 2024, but around $4.9 million of that went to cultural activities that may not have met the state's requirements for attracting overnight visitors. Auditors reviewed a sample of 25 out of 249 contracts and concluded that city officials did not consistently verify how the money was spent or that promised programming actually took place, citing missing receipts, limited ticketing data, and a reliance on professional judgment instead of formal documentation.

  • The audit was released on Monday, April 8, 2026.
  • The audit reviewed spending from fiscal year 2024.

The players

Dallas Office of Arts and Culture

The city department responsible for administering hotel occupancy tax funding for cultural programs.

Kimberly Bizor Tolbert

The Dallas City Manager, who stated the city recognizes the need to further strengthen and formalize its processes for verifying hotel tax-funded activities.

Texas Tax Code §351.101

The state law that governs how municipal hotel occupancy tax revenue can be spent, requiring funds to both promote tourism and support the hotel and convention industry.

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What they’re saying

“Existing processes have provided oversight but the city recognizes the value of this opportunity to further strengthen and formalize them.”

— Kimberly Bizor Tolbert, Dallas City Manager

What’s next

The audit recommends the city formalize a process to evaluate hotel tax eligibility before disbursing funds, require standardized recordkeeping and receipts, perform budget-to-actual comparisons, and document visitor impacts. The Office of Arts and Culture agreed to adopt a checklist and other controls, with implementation and follow-up dates running into late 2026 and mid-2027.

The takeaway

This audit highlights the importance of cities strictly adhering to state laws governing the use of hotel occupancy tax funds, which are intended to support tourism and the local hotel industry. Dallas now faces the challenge of quickly implementing stronger verification processes to avoid potential repercussions from the state for the improper use of nearly $5 million in hotel tax revenue.