Harris County Republican Party Chair Paul Simpson supports Pension Bonds

From the InBox:

David,

The 2018 GOP Primary office will accept precinct chair ballot applications at the Executive Committee meeting this Monday, September 25. We have a packed agenda, including endorsements for the upcoming November elections.

One particular note: Because I cannot take sides in debate during the meeting, I urge you now to support the resolution in FAVOR of the Houston pension obligation bonds (POBs) that were authorized by our Republican legislators last spring. This may seem counter-intuitive, because Republicans instinctively oppose government borrowing. (For example, we will consider a resolution rightly opposing the half-billion-dollars in proposed bonds for the City of Houston to incur new debt.)

The POBs are different. To sum up:

• This legislation was not the Mayor’s original bill. That bill would have kept kicking the pension can down the road to ruin. Our Republican leadership led the charge to pass legislation that is a long-term fix.
• The City’s pension obligations are under water by over $8 billion, and getting worse.
• The POBs are not new debt. They effectively refinance existing obligations to much lower interest rates. In exchange for the bond proceeds, the future net pension obligations will be reduced by reductions in future benefits to the tune of $2.5 billion.
• Crucially, Republicans added a “Trigger” that requires pension funds–after a grace period–to be 65{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} funded, or else new employees will automatically switch to “cash balance” plans like Harris County uses, capping taxpayers’ liability.
• NOTE: If the POBs are not approved, the reductions will be rescinded, and the City will be back to square one. And Houston will be back on the road to bankruptcy.
• The POBs are an integral part of complex Republican legislation that will fix Houston’s pension mess once and for all. Approving the POBs is the fiscally responsible thing to do.
• Approving the POBs is also politically smart. If they fail, Houston reverts to the pension status quo. The Mayor will then use the City’s financial mess to help undo the critical property tax/revenue cap that imposes any fiscal discipline on the City.

Beware of outdated misinformation about the POBs. Instead, you can see a wealth of information in the extensive reports on the 260-page Senate Bill 2190 on the Texas Legislature’s website (link here).

• Lieutenant Governor Dan Patrick and Senator Joan Huffman will be at the EC meeting Monday night to briefly speak about the POBs and the legislation they championed. It will be worth your while. See you then!

Paul Simpson, County Chair

Harris County Republican Party

Interesting.