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’!