That is the real question when it comes to the proposed Pension Obligation Bonds that will be on the November ballot for the City of Houston. The issue is so complicated that the only thing most of us can do is turn to those we trust and make the best informed decision we can.
There may be some objective help on the way.
For those of you who aren’t familiar with Grieder’s work, she is, in my opinion, the best writer in Texas on economics and fiscal issues. She has a unique ability in that she can take extremely complicated subjects and break them down so that people like me can understand them. The Houston Chronicle has never had anyone even close to her ability – how they managed to get her is a mystery but one with a very good ending for grassroots political junkies, regardless of your political leanings. I haven’t had a paid subscription to the Chron in years but as soon as I make sure this is official, I’ll sign up again. She’s that good.
The problem is that I don’t know if ‘next month’ means October 1st or November 1st. Since I’m hoping for the former, I’m going to act as her assignments editor and give her two weeks to study the POB issue and render a verdict – is it a good thing for the city or a bad thing for the city? If she is able to complete my assignment, you will have a very good, very trustworthy analysis to use to help you make your decision.
But if that doesn’t happen, what do you do? Who do you trust?
Well, one person I wouldn’t trust is Mayor Sylvester Turner. And I suspect that is the reason that the Harris County Executive Committee voted down the resolution that was supported by the leaders of the party. As I said earlier, the opposition to the POB’s is mostly emotional and Turner certainly arouses the passions of conservatives in Harris County.
So who then? Well, if I lived in the city, I’d rely upon the leaders in the Republican Party that I’ve known for years that are, without question, fiscally conservative. For me, those folks would include County Judge Ed Emmett, Lt. Gov. Dan Patrick, Sen. Larry Taylor, Rep. Dennis Paul and HCRP Chair Paul Simpson, among others. Since this is a city issue and not a county issue, I don’t know if Emmett is going to weigh in, so I’d find a substitute, which is easier said than done since I really don’t have a good data point for a fiscally conservative leader at the city level. And since Sen. Joan Huffman actually put this bill in play, and given that she is a solid fiscal conservative, I’d listen to her.
Given that list, I’m certain that you could figure out how I’d vote if I lived in the city. I don’t think it is prudent to let my distrust of Sylvester Turner and past fiscally liberal leaders of Houston outweigh my trust of the fiscally conservative leaders that I’ve known for a long time.
I hope that voters in Houston take a second look at Chairman Simpson’s thoughts on the issue. In typical Simpson fashion, they are short, to the point, clear and unequivocal. Heck, let’s look at them now:
- 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).
Now, I realize that other writers (and commenters) on BJP do not agree with me that Simpson is a solid fiscal conservative. I admit to laughing out loud when Don Hooper called him “a big government establishment Republican” in this post. Simpson is a lot of things but a big government establishment Republican isn’t one of them. In fact, he’s exactly the opposite and has decades of history to prove it. But hey, we are all entitled to our opinion, although our opinions should have some basis in reality. I have no problem whatsoever trusting Simpson’s bullet points above and I hope that you seriously consider them.
So there you go. Perhaps this gives you another data point or perhaps you shrug and say no way, no how, never will I vote to save the city billions of dollars and keep the city from bankruptcy. Because, libruls.
And Grieder, hop to it! Time’s a wastin’!
meh, if she’s as good as you say they probably hired her to keep her quiet
I’ll be damned if I’ll ever get on board with the notion of issuing bonds to pay pension debt. ( This is the same reaction I had to Joe Biden and our own Phil Stephenson who believe we can borrow our way to prosperity) And how is it that the state constitution will not allow the state to operate with a deficit budget yet the cities can? Let city hall mint houcoins and pay the pensioners with those. They can be redeemed at all city facilities for the services they render.
Pensions bonds are exactly the opposite of a rainy day fund. The money isn’t there because it was spent on other priorities. The people that find their pensions short argue we all benefited from that fiscal diversion. Well if we did so did they so that’s a wash. There is a certain reality that needs to be faced.
There is a reason I pay my property taxes before the end of the year. It’s to avoid paying a penalty. You know, paying more for something that I didn’t have to. I paid my taxes AND saved for my retirement during all the years the municipal pensioners watched their plans go underfunded. How on earth is it my fault they didn’t pay attention to what they were watching?
So who do I trust on the pension issue? Me.
Unfortunately, I’m not as smart as you DanMan, so I have to rely upon people that I respect.
Thanks I’m surprised you included Dan Patrick in your list of respectables. I thought you and he had parted ways. You also still have Joe Strausenfreud.
The best answer to your question is yourself. Everyone else will be biased for one reason or another. The most vocal people tend to be the least educated on the finances or those with a personal stake, I double dare anyone to read all three yearly pension reports from last year and compare them to comments made by individuals or representatives of specific pensions, there you will find all sorts of untruths. While those reports are only a snapshot of the finances involved, at least they are a good starting point to understanding.
It should be noted that the $1.4 billion remark the mayor uses appears to come from the city of Houston website where it is pointed out that the cumulative “savings” from employees for the first five years is that amount. Even there, the specific amount will vary given all the variables that are constantly changing. How many employees retired in the last fiscal year to keep from losing benefits? The firemen and police are claiming hundreds have left that would have otherwise stayed. When they left, how many of them transferred over any money saved in DROP accounts to an IRA or other private account to protect it from future changes or to keep earning interest? How many not vested employees decided to head to greener pastures? All these questions and more simply can’t be predicted ahead of time and each one impacts funding levels.
At the onset of the announced legislation last year, all three pension funds were in agreement to make changes, one of them backing out when the $800 million in cuts became closer to $1.1 billion. That group demanded new employees still get to keep the DROP benefit untouched, the other two having given it up in previous concessions. And not a soul alive declared that this was the definitive fix for all the ills associated with pensions, even that pesky democrat mayor so many Republicans hate sight unseen. So no, it is not a perfect fix and no, it doesn’t make everyone happy but it is a step in the right direction. Under a worst case scenario for market returns, benefits get cut again in the future, this being another demand by the aforementioned group they refused to have included in the bill.
So pass the bond and see the cuts maintained or reject it in favor of wishful thinking that a future legislative session will be more daring; a third of the cuts still to remain as a catch up to the other groups’ previous cuts. Those that are just itching for the city to fall into bankruptcy don’t want the bond to pass, few of them living in Houston so they think they’ll be safe from the fallout but you can research the ripple effect of such measures while reading up on the core subject if it pleases you. While you do that reading, go ahead and read the county budget as well to see how much their pension benefits cost, just don’t forget to include social security since they pay that too. You will find out which body pays more for employee retirements, at least new employees since the cuts started.
Borrowing a billion dollars to pay for a debt we could not afford in the first place is the height of fiscal irresponsibility. Peter D acts like there are some great cuts being given by the employee group yet he can’t explain them. No one can explain them because what the brokers of this deal agreed to do is call a cut a future promise of raises and benefits that have never been offered a cut. These are not cuts. It is actually a big lie.
The unfunded liability rests in the DROP accounts, which were not touched in any way. Senator Huffman told a fib, albeit a big fib when she suggested the DROP accounts were somehow reduced. They were not and Bill White put an end to new folks entering the program awhile back. Dan Patrick and Joan Huffman had nothing to do with it.
Dan Patrick, Joan Huffman have lined their pockets with union money and have ever since they have been in office. Joan and her husband vacation with the HPOU lobbyist. Dennis Paul , Allen Blakemore’s client and appointed by Straus to the House pension committee, is the last person to listen to on this issue. Paul refused to meet with me and others over this issue when it was being debated in Austin. Make no mistake Ray Hunt, then HPOU President, would have paddled Dennis Paul’s behind if he did not do exactly as he was told. Paul is also a large recipient of union money. Again, I will remind everyone again Allen Blakemore has been the HPOU lobbyist for two decades and is the consultant to Patrick, Paul, Huberty, Zwerwas, Scholfield, the list goes on. Watch the debate in the House on 2190 and you will see who spoke on the issue, all Blakemore clients. I was present.
I know Peter D will post again with a list and the amounts of the DROP accounts. This is where the 7 -10 billion dollar unfunded liability lies. The union pension fund has nothing more than an excel spreadsheet calculating the interest on everyone of these accounts. They were never funded in anyway. You are in the DROP for 20 years you should have over a million dollars in your account.
Heck the towel boy at the police gym retired with 1.25 million in his DROP account and had not patrolled the streets of Houston in 20 years. The taxpayers can make a decision on accurate information. All we have heard form these folks is spin. Show us the accounts!
If the cuts were so meaningful and great why is it that union wants this deal so bad? All they would have to do would be kill the deal and they get all these valuable cuts back, but they sure don’t want them back do they. The unions want the billion dollars and run out the door and yell suckers. The supposed cuts are worthless or this deal would have never been cut. Let someone try and explain them to you.
** The best answer to your question is yourself. **
This — one thousand times!
How you come down on the pension bonds and this “deal” is going to depend heavily upon certain assumptions and answers to key questions.
Every analysis is going to be based on certain assumptions regarding the trigger (unenforceable, and useful only as political cover in my view), amount of “concessions” (murky at best), assumed rates of return (these are still much too high in my view — look to well-managed, transparent sovereign wealth funds such as Norway’s for more realistic long-term assumptions; and why not defined-contribution plans for new employees, to truly control future costs?), debt service cost projections (probably too low — because, politicians), etc.
On top of this, the mayor has already promised this deal includes gutting the property tax revenue cap — that just won’t be coming with the revenue bond vote this time, because it threatened the whole deal. So people really ought to take him at his word that these items are tied.
And finally, if you do conclude from the assumptions above that this is more can-kicking to solve a political problem for current pols (locally and in the lege) — the question then becomes, what obligation do we have to honor unsustainable deals made by past politicians (Lee Brown)? Are taxpayers just on the hook, and that’s it? Because that’s Bill King’s “sanctity of contract” view.
I don’t really see many true taxpayer voices on this one. I respect Erica Grieder and look forward to her perspective on area issues, but I don’t know that “taxpayer champion” is how I would describe her (aside: the Chron could use more than one decent columnist, but one is a start!). Patrick and Huffman have other agendas. Even Sen. Bettencourt, who was superb during the legislative process, apparently now feels boxed in by that meaningless (IMO) “trigger” and won’t oppose this mess. So your true taxpayer voices are probably going to be from outside the establishment and certainly outside the left-of-center media voices in town — grassroots, in other words. *waves at Don Hooper*
Good lord Kevin:
Sheila Jackson Lee says the same thing.
Just sayin’.
Haha, I’m gonna give that the “broken clock twice a day” treatment. 😀
In all seriousness, I do think we as citizens have to try our best to understand these issues. Some of the financial stuff is complicated and we’re not actuaries (most of us probably aren’t, anyway), so we do have to draw on trusted sources.
I tend to like CPAs and MBAs who have strong finance backgrounds (public finance, even better!). I am always skeptical of politicians and how they frame issues, D and R, so they tend to have an extra burden of proof with me (I think Bill King has demonstrated he knows these numbers as well as anyone; I am far less sure of Patrick or Huffman).
Okay, I’ll trust Don too. That first sentence tracks pretty well with my august take. Dennis was shocked at my take on the pensions. To make it even I was shocked at his.
“The unfunded liability rests in the DROP accounts, which were not touched in any way. ”
Past accumulations were not touched. I said that several times if you bothered to read it. The yelling and screaming by your friends in HFD is because 1) they do not want new employees to lose DROP like their brothers in blue did 13 years ago, and 2) they wanted to be able to continue accumulating more money under the old formula that included overtime, assignment pay, and allowed them to cherry pick their best pay periods. Don, you’ve preached about it endlessly regarding police but turn a blind eye when it comes to firemen yet cuts in the DROP formula do amount to concessions. Currently, there are many more firemen with DROP accounts because they had the benefit until this recent legislation kicked in, the cops gave it up for new employees 13 years ago and well over half their department is under a newer plan that has no such benefit.
And while it is being brought forth yet again, the unions have no sway over pension matters per state law, only the pension boards do. You will not find a single rank & file employee serving on both a pension board and a union at the same time courtesy of state law. Their interests overlap to a degree but they are not the same thing, neither group gets to dictate what the other does. The funny thing about your accusations of union guys taking the money and running, the head of the cop union has about 5 years in DROP, many of his fellow union board members have markedly less. Contrast that with the fire union/pension, the cherry on top being that the executive director of the fire pension system was one of the longest serving cops on the cop pension board. This is all freely available information by the way, go look it up for yourself.
Granted, if the bond fails, that will give those remaining in DROP for two employee pensions two more years to accumulate at the old rates before taking the money and running as you put it, all at the expense of those under the newer plans that are far less lucrative. Is that your true intention? But if the cuts are nonexistent, why is HFD screaming so loudly about all they lost in the deal? Are you calling them liars? If you live in the city, vote any way you see fit, just be prepared for the consequences as there is no way to recapture earned benefits once they take the money out of the systems.
Peter D,
Please posts the accounts. Let the Houston property taxpayer decide. Firefighters pension is funded, very smart people. Understand why that is and accept they don’t need a billion dollars because they are responsible adults.
Don, if you read what I wrote the other day, you’d know that I joined you in calling for the aggregate data to be released, except I included HFD in the equation. The difference between your comments on such accounts and mine is that I have seen several of them and have a better understanding of what was paid to employees when versus your pure conjecture based on a comment by a hostile union official that is barely in DROP himself. According to their own actuaries, HFD’s fund as of what they provided the state legislature in March was closer to 70{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} than the fantasy numbers you and some of them cling to. By dropping the rate of return to 7{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} from their previous 8.5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}, they added over a billion in additional liabilities on top of those incurred during the last two reported years where they completely failed to generate needed returns.
But the continued suggestion that DROP in all its forms is the cause of difficulties is simply wrong, the lack of all three pensions achieving their specific goals, the smoothing provision used to hide immediate losses, and COLAS being widely attributed as the biggest problems. Much of that has been addressed but not all so while both of us can wait until we turn blue for numbers HFD has fought hard to keep secret via courts and the others only give in limited form, the decision of voters residing inside the city is simple, vote yes for a partial solution or vote no and gamble that the same players will do something different than they have in the past. Governor Abbott isn’t going to call a special session over pensions so any possible changes would come in 2019, then we get to watch the state waste more precious time on that than things like school finance, redistricting, Harvey reimbursement, and core issues voters across the state want addressed.
Interesting thought. Your suggestion is a good way to resolve the decision
Who is trustworthy? Or more specifically who is trustworthy on this issue?
I would question the ability to assess trustworthiness of any individual because the numbers are being kept hidden.
The management of the funds is a contributing factor to the problem. As it stands now, it’s difficult to support the plan since we don’t have access to the numbers.
If the Mayor was willing to order the books opened and others who have no stake in the outcome analyze the numbers the plan may well be worthy of support.
First, asking the Republicans to endorse a $1 Billion bond so as to bail out the politicians, which has been controlled by the Democrat/Progressive Ruling Class for over a century, and who created the mess that has made the City insolvent, exposes the party to the propagandists who are very quick to blame Republicans for every ill. The Democrats didn’t want to endorse the bond, and it was their members who created the mess.
The City is still on the verge of bankruptcy, and I say let the Bankruptcy court sort it out. Maybe the Governor will order a Receiver for the City, and then real changes can be made, and solutions implemented then.
Question: What sense does it make to collateralize the CoH’s “debt” to the pension funds via these POBs?
Kevin, 1) the bonds are supposed to be proof of city buy in of the deal, most of the concessions lost if the bond fails, and 2) bonds can be issued at about half the interest cost of needed pension returns, saving in total costs as long as the investments achieve at least the rate of the bonds though hopefully more than the new rate of return for the three pensions.
“supposed”, “most”, “if”, “as long as”, “hopefully”
You see that can on the road over there? I want you to kick it like you’re mad at it!
Dan, just because you’re not well versed in the specifics of the issue doesn’t mean you are completely clueless. If you’re holding out for a perfect solution from a governmental body for anything, you’re never going to get anything done.
Perfect? I’d settle for honest and practical.
BTW-I received a call from a pollster, wanting to know how I would vote for the pension bond. Even after I said I would not, I realized it was a push-poll, because the girl then read other statements, trying to influence or flip my position. At the end, she said she agreed with my reasons not to vote for the pension bonds.
Is there anyway to hold those responsible for this situation accountable? Seems like somebody should go to jail. Plus, public employees need to get the same dose of reality that we in the private sector received 30 years ago.
A couple of items to note based on prior commentary:
The DROP accounts are not the sole reason for the underfunding. They are one major contributor, but the COLAs are another, and so is the use of 8{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} – 8 1/2{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} earnings targets when actual earnings are/have been significantly lower, closer to 5 1/2{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} the past 5-10 years. Of course recent stock market performance can certainly bring the 5 year average up. A 7{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} target would be an improvement, but then reducing the earnings estimate causes the required annual contribution to increase. Higher contribution requirements normally lead to….more under-funding.
The underfunded balances are not “pegged” to any of these contributing factors. You cant say the nderfunded balances lie in the DROP accounts any more than you can say they lie in the COLAs.
Neither can you claim the Firefighters’ Fund is fully funded. It is not. It’s certainly better funded than the other 3, at about 80{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} as of June 30, 2016, compared to 62{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} for the Police fund and 48{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} for the Muni workers’ fund. And in the world of municipal pensions, 80{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} is somehow considered good. If you would be happy if your employer were to hand over 80{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} of your 401K plan upon retirement, then I suppose you would agree that a retirement fund that’s 80{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} funded is a good thing. I do not.
The main point to note about the Firefighters’ fund is that until the past 2 years, it RECEIVED the full annual required contribution (the “ARC”.) This is NOT full funding. If everything goes according to plan, full payment of the ARC would result in a fully funded pension trust. So why isn’t the Firefighters’ fund fully funded? The major reason is that its actual earnings have been far short of the target returns of 8 1/2{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}. The proof of excessive earnings targets is in the pudding.
The bottom line here is that this problem has been kicked down the road for so long there really isn’t a fair solution for the employees or the taxpayers. Anyone who thinks bankruptcy is good for the city probably doesn’t understand that Federal bankruptcy judges appoint people to make decisions who don’t answer to anyone. Those who believe the pension bonds are going to solve the problem don’t fully understand how bad the problem is, and ignore the $600 million of EXISTING pension bonds issued years ago in another failed attempt to solve the problem.
We have a Cornelian dilemma.
Bill, the focus here on DROP has been driven largely by Don who insists on using numbers that aren’t supported by any factual data, also applied only to one of the groups over some kind of personal grudge as best I can tell. In regard to your comments about HFD funding, a large part of that is due to the use of smoothing provisions that mask how poorly their fund and the others did in 2015 and 2016’s reports. All three pensions lost a lot of money in the markets, the double digit losses only realized completely by the end of a five year time frame. A large part of the stated liabilities are solely due to lowering that rate of return for all three pensions, each percentage point amounting to over a billion dollar increase in liabilities.
The city’s committee of pension experts, made it clear years ago that DROP was only a small portion of the problem, changing the specific formula could keep the benefit sound, but most employees hired since 2004 (police) and 2007 (municipal) lost it completely with no additional compensation to mitigate the loss. Now that HFD’s new employees will not have the benefit, it’s only a matter of watching people retire to see the impact of the benefit fade. The committee found the biggest issue was the COLAs, recent changes to those form a big portion of the concessions, the “corridor” mechanism sound in principle but untested legally is designed to address future losses. But if the city goes bankrupt, all sorts of other spending will be on the table so it won’t just be pensioners that have to worry, every other program in the city will potentially be on the chopping block as well, the uncertainty strong enough that only a fool would wish to try it.
I trust Harvey.
Harvey is an asshole, but he was brutally honest in exposing our leaders for failing us.
Fix the flooding or I’m leaving and it’s all a moot point. Try financing those bonds with a gutted tax base once companies stop moving here or relocate elsewhere. That’s the truth and the rest is bullshit.
I’m voting NO. I have heard many people share this opinion. Not one more dime until the government stops failing us.
The bottom line on pensions is really pretty simple.
Pensions are part of employee compensation packages like salaries. People consider pensions when they accept jobs.
For years, Houston officials — all of whom are out of office and many of whom are dead — chose to shortchange annual contributions to the pension funds rather that make tough decisions on reducing expenditures or raise taxes. After all, they knew they would be former officials or even dead when the lack of pension funding hit the wall.
The employees are owed that money for pensions, just like they are owed salaries. It’s reached a point where city officials and pension plan members have come to an agreement to quit kicking the can down the road. If we don’t do something, it’s only going to get worse. The city will owe more — lots more — every year.
Sometime in the future, the city will go bankrupt and retirees will have their pensions cut by bankruptcy courts. It would be truly ugly.
We can’t change the bad decisions of the past but we can try to minimize the effect on the future.
Tom, except for Mario Gallegos the major players of this mess are very much alive and some are still in office.
The underfunding began the first year Lee Brown initiated the new pensions. Prior to the change the city was adding about 10{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} to it’s payroll costs by contributing to pensions (all groups). Lee Brown declared we could afford to bump that to 15{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}. I believe that was in 2002. By 2004 the actual required contribution was about 40{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} of payroll but the actual amount contributed was closer to 30{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}. Bill White injected around $600 million in bonds by 2005 or 2006 to try to catch up.
Right now the city is contributing around 28{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} of payroll if the numbers from Anise Parker’s task force are correct. I have no real reason to suspect they are true but the city published it so that’s what I am using.
The players? Lee Brown, Bill White, Anise Parker and now Turner are mayors that have kept the status quo Lee Brown initiated. We have a strong mayor form of government here. The mayor owns the agenda.
On the legislative side we have Mario Gallego (deceased, former HFD), Sen. John Whitmire and Sylvester Turner who worked to carry the water of these mayors by diluting the local control aspects of the plans and spreading it to the legislature.
The citizen’s responded by voting in TABOR during White’s tenure. Bill White fought and lost in court three times to remove the limit on revenues that TABOR brought.
Anise Parker beat TABOR by running to Travis County to shop for judges that would back her in declaring infrastructure projects could be funded by user fees instead by taxes. Hence Rain Tax.
In the summer of 2016 the Texas Supreme Court ruled unanimously that said rain tax was passed by deceptive language and ruled it unconstitutional.
Mayor Turner still charges for that tax and threatens tax payers who with hold the monies with liens on their property.
While its true we can’t change the past we should be able to hold those accountable for the decisions they made and the damage they did. And any discussion of going forward needs to have an informed citizenry weighing in.
As it is we can’t get the information and we are being told we can’t sit at the discussion table either. Turner trying to get us to vote on his jacked up plan is his way of having the people that had nothing to do with the problem take ownership of it without even knowing what they are getting into. Read carefully what Kevin wrote at 11am yesterday. There are many moving parts to get to a place where we obligate ourselves to massive tax hikes for 30 years to pay for the mess the mayors and their local dem help mates in the legislature ginned up in 15 years.
If you think the roads are bad now just wait until they are much worse and your taxes are doubled. To pay for pensions of those that qualify to retire in their 50s.
I thought Mayor Lanier was the first mayor to shortchange the pension fund. In any case, prior mayors and councils dug a big hole. Unless we do SOMETHING to stop the bleeding, it will just get worse.
If you haven’t guessed, I think it is dishonest to the taxpayers to underfund pension contributions. Public officials should either fund them or change them. And, if they don’t want to change them, they should either cut spending or raise taxes to fund them. Otherwise, there will be financialruin in the longrun.
Peter D
Which funds have already received $$ derived by the sale of previously issued POB’s in the amount of roughly 600 million?
How is it that after benefit concessions in 2004/2008/2011 by HMEPS & HPOPS, and the infusion of POB dollars into both funds for multiple years are they still in an extremely underfunded position? And yes HFFRRF is underfunded, but they are arguably in a healthier state than the other guys are and were still able to keep their benefits and not need any POB $$.
If we give HPOPS 750 mil & HMEPS 250 mil per SB2190 and take their concessions, what is the guaranty that they will prosper based on the fact that they have been down this road before?
And you can bash the FF’s of HFFRRF all you want but guess what…
If Prop A fails, HFFRRF concessions stand but HPOPS & HMEPS take theirs back.
And if Prop A passes, HFFRRF gets NO $$ from the 1 Billion bond sale.
Win-Win for HMEPS/HPOPS
Lose-Lose for HFFRRF
I am voting YES for the bonds because I am hoping and I say again…hoping that we can move forward on this issue. The POB’s are one facet of this Kelly Dowe/Ron Lewis derived “pension solution” that no one in this country currently uses so it has to work eventually….right?
Oh and speaking of Kelly Dowe….no longer a COH employee….went into venture capital if I am not mistaken. So much for seeing this thing through?
Elliott,
the difference in previous POB’s and those being voted on now is that the previous bonds were used in place of the yearly funding while these new bonds are in addition to yearly funding. Mayor White did not even use all the proceeds for their intended purposes but his biggest sin was to start his funding schedule for municipal and cop pensions at less than half their required contribution, the yearly increase was not enough to overcome the interest costs so even the draconian pension cuts of 2004 and 2008 for municipal and police pensions that HFD escaped were not enough to offset the building debt.
Even if every penny of the new POB’s is spent on their intended funds, there are no guarantees that the markets will continue to soar or that the pensions will invest them well enough to steer clear of the corridor provision. It should also be noted that neither the $250 million to municipal nor the $750 million to the police pension is a true rendering of what the city owed each fund. The best way to explain it would be to remind you how under a defined benefit pension system, the city is responsible for any losses due to markets as well as for any under funding it engages in. That is why so many want to move all new employees away from a DB plan to a DC plan, it lowers the fluctuations in costs. But even if you simply calculated what the city should have contributed each year and added it up along with the loss of interest, the amounts owed to the two plans would be more than they are getting, the municipal plan owed more than twice what they are receiving if the new bonds prevail. The difference now is that the corridor provision can kick in to limit cost increases to the city for all three plans, experts in finance and public policy freely admitting this is a brand new idea that may well be adopted by many other organizations that are facing similar pension woes.
Otherwise, it’s not bashing the FF’s of the HFFRRF to point out they evaded pension concessions for 13 extra years, that they were also unable to hit their target returns on average, or that the state refused to allow them to become as under funded. If these were the first employee concessions by all three groups, some of the HFD rhetoric would be more reasonable but without the recent changes, the cost of keeping HFD’s more luxurious pensions would have cost Houston a great deal more thanks to the dismal market returns of fiscal years 2015 and 2016. Their pensions are still superior to the other two groups and this is before they get raises few workers in the private sector are likely to obtain in coming years but that won’t happen if the city’s finances are further weakened by a rejected POB proposition. As such, the bonds are a win-win for them too, the likelihood of additional pension cuts for them during the 2019 legislative session if the bonds fail is substantial as well.
I’m interested in why you think Mr. Dowe and Mr. Lewis invented the corridor provision since they have never claimed it, the think tank coming up with the basic idea comprised of more than a few people. As far as Dowe returning to the private sector, I’d think you’d be happy for all concerned since his compensation at least tripled overnight and he will no longer be sucking at the government teat, did you rail about State Senator Bettencourt when he left his county office to cash in on his expertise, or any of the others from either political party did likewise? If the bonds pass and everything unfolds as intended, the city will be better off financially no matter what happens in the markets, the employees subjected to more risk of lower benefits than has been the case in decades.