by State Rep. Jim Murphy
Earlier this year I took to these pages to clear up confusion about the HISD recapture vote. Working together, we passed the HISD proposition and kept $8 billion of commercial property on the HISD tax rolls, preventing skyrocketing property taxes for homeowners.
This November, Houston voters must once again decide between a fiscally prudent path or one that guarantees financial calamity and higher taxes for everyone. While good people may disagree on a final pension solution, we can all agree that we must begin now to reduce the current $8 billion in unfunded pension liabilities and limit future taxpayer exposure.
Houston voters can begin to reduce the city’s high-cost debt and shore up the pension funds by voting for Prop. A, the Pension Obligation Bond. Currently, taxpayers are charged 8{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} interest on the $1 billion which the City of Houston borrowed from the police and municipal workers retirement funds (by not making its contributions). This debt leaves the funds dangerously underfunded and costs us taxpayers millions in unnecessary interest charges.
Passing Prop. A, is good for taxpayers. Here’s why:
- Unlike the other bonds, Prop A does not saddle the City with additional debt.
- Passing Prop. A will refinance existing debt at a much lower interest rate, potentially saving taxpayers hundreds of millions of dollars over the next 30 years.
- In return for passing Prop. A, taxpayers receive an additional $2.5 billion in agreed upon benefit reductions.
If voters reject Prop. A, we taxpayers will lose the $2.5 Billion in savings from the agreed upon concessions. What’s more, we taxpayers will also continue to pay higher interest rates and the city pension crisis will worsen to the point where we will be forced to pay more and higher taxes, leaving us and our city poorer each year.
To put it plainly, would you continue to pay 8{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} interest on your house or car if you had the ability to refinance at a much lower interest rate? I wouldn’t.
As someone who has consistently advocated and fought for returning control of the pensions to local governments, I can assure you that it is much easier to design the perfect fix than it is to garner the necessary support to make the perfect piece of legislation the law.
Lt. Governor Dan Patrick showed tremendous leadership by getting the multitude of parties to come to a baseline agreement that put taxpayers and retirees first. My friend, Senator Joan Huffman worked extremely hard to craft a bill that ALL sides could agree upon. Joan’s bill goes further than any previous pension bill. It ensures that our City employees and first responders will indeed get the pensions they have earned. It also gives taxpayers a seat at the table. That seat is our ability to vote for Prop. A which was championed by Senator Paul Bettencourt along with an overwhelming majority of our colleagues in the legislature.
The process of fixing Houston’s pension mess begins with you and all of us voting for Prop. A.
Hey Jim, can you tell us the dynamics of your attitude change from sponsoring a bill to return local control of Houston’s pensions to the tax payers of Houston which was slapped down by the House pension chair Dan Flynn two sessions ago to joining him during your anointment as a member in good standing with the Texas Municipal League a week or so ago?
Were any dollars involved? asking for a friend…
Wrong.
We have the revenue cap to protect us from having our taxes increased. This is a LIE that voting NO will raise our taxes.
What else is new? The city and its allies do nothing but lie to advance their agenda. I’m sure Jim thinks he is doing the right thing but he is eating a steady diet of propaganda.
The only way to have sound fiscal government is to hold the line and vote against the bonds.
Every single voter must show up and cast a vote for no.
Only by defeating Sly Turner at the ballot box can we ever hope to get leverage for clean government.
The switch to defined contributions will be imminent once voters defeat this bond. Fiscal conservatives will be blamed for the meltdown of bad liberal policies, but that has always been true. The transition will result is sustainable, long term policies.
I have a feeling there is about to be a major tax revolt in the next two weeks.
Worst case scenario, I move out of the city limits and get slammed with an awful commute. But that is guaranteed to happen under current policies.
Switching to defined contribution does nothing about the current unfunded pension liability. That stays, regardless of what changes are made going forward.
So, what’s your plan for fixing the unfunded liability?
Before moving out of the City, I suggest you check the overall tax rates in the unincorporated areas. Most of them are higher than if you live on the City of Houston and HISD.
Ross, the city needs to come up with an answer. I don’t get paid to come up with plans that will only be ignored. That plan has to include defined contribution. Force their hand to include defined contribution and then we’ll address the unfunded promises. We need to get our house in order. It has been out or order for decades – we can wait for defined contributions. I don’t share the sense of urgency. The finances have been out of whack for likely my entire adult life but it’s my job to fix?
Homestead tax rate in Bellaire is about 1/4 less that in Houston. Go a couple of counties over and its 1/3 lower without the additional 7 or so taxing entities like HCC, Port of Houston, HC ED Dept. etc.
Besides there’s a certain aggravation to be faced with working at 65 to cover your own retirement while also paying for your neighbor to retire at 55. Twice.
Ross, you’re only going to confuse the two who insist that changing to a defined contribution plan is the single magic bullet. Of course moving to such a plan won’t touch a penny of the existing debt, further, doing so will accelerate the costs of the existing plans when they stop getting contributions, the only way such plans could lower liabilities would be to drastically lower the resulting benefits. To remain competitive with the county and other major cities, such plans would end up costing more up front too, making the resulting budget crunch even worse.
As far as their expected savings from moving are concerned, in my experience you will find a house in Bellaire costing a significant premium to the same structure in Houston so any savings in rates are more than made up for in the actual expenses. Moving to the unincorporated county generally does one no favors either, the ISD rates are higher with fewer exemptions, then you get the MUD taxes, higher water rates, HOA fees, garbage fees, and street light costs among other things, the commute adding costs while taking time away from family or more constructive purposes. Moving multiple counties away only makes that worse.
And it’s probably true that God fearing Republicans in the form of firemen and police will scream bloody murder if the corridor provisions kick in at some point in the future to lower benefits further, one of those groups is already doing so in anticipation of more cuts, just as the masses on the left rail against them but the provision is there for years when the three pension systems don’t make double digit returns as they did in fiscal year 2017. It seems like some just want to lay the entire problem at the feet of Turner, the man who convinced the super majority of the GOP led legislature, employees, and the governor, to cut benefits while addressing the problem. The two act like the proposal’s failure will magically change Houston into a Republican stronghold and we all know that just isn’t going to happen as the city turns increasingly blue along with the surrounding county.
The true solution has little to do with pensions anyway, it has to do with cutting all spending. The bulk of firemen in the unincorporated county are volunteers, maybe that is part of the answer. Or let’s get Windi to champion selling off the Zoo’s assets to the private corporation paid over ten million each year to run the facility, I’m sure her leadership would improve things without city money and the resulting regulations. And do we really need so many cops enforcing all those laws people ignore anyway or road crews with ten people watching while two do the work? You get the idea.
Here’s a copy of a letter I wrote to Greg Abbot following the 2015 session and going into the mayor election in Houston.
“Office of the Governor
P.O. Box 12428
Austin, Texas 78711-2428
August 14, 2015
Dear Mr. Abbott:
We are in a mayor’s race and one of the major topics is the unfunded pensions. The local politcos declare their hands are tied by the legislature. I have called most of the pension committee house members and I have learned that the democrats and the rural republicans are pretty much in lock step about not taking up any changes to municipal pension plans. SR Dan Flynn, who chairs the committee declares “It is a Houston problem” and his action agenda includes ‘taking up a study’ when they convene in 2017.
A review of the information at the State Pension Review Board shows no study is needed, the condition of all of the public pensions is well known and the information is readily available with the mathematical solutions provided. I asked them what their purpose is other to generate this data? Do they have any enforcement or regulatory tools? No. They do have solutions with 30 and 40 year timelines to pay off debt that has been accrued over the past 13 years.
So we have locals who say they can’t do anything, state reps that will not do anything, a pension review board choc-a-bloc full of data no one is using. The problem is still building. And this whole charade is being back stopped with an illusion that the peasants will be there to pay for it.
What say you Governor?”
This letter was written just after we learned Jim Murphy’s bill to bring back local control would not be let out of committee by Chairman Dan Flynn. Let the record note I did not get a response.
It is correct that we should vote NO on most bond issues. Bonds are deferred tax raises. However, I was intimately involved in the pension deal. We got what we wanted. If the pension debt continues to rises, and the corridor fails, there is a trigger that puts all new city employees in to a different, sustainable plan. Good for the employees and taxpayers alike. The pension bonds are NOT new debt and are tied to the deal. They must pass so that we get the trigger. The trigger is the systemic change that stops the bleeding going forward. Pensions will do awesomely this year thanks to the rising market.
nope. It is a way for Sly and his posse to show the taxpayers are okay taking ownership of the debt. That is what the legislature wants too. You want to know why? Because just about every public funded pension plan except the judicial and legislative branches in Texas are pretty much just like Houston’s with only a varying of degree.
And today we find our police have voted their new union leader from the ranks. He was the 2nd Lt for 5 years and hails from Long Island New Yawk!! Sheila Jackson Robert E Lee is from Queens, maybe they know each other and can compare notes!
Kill the deal and let reality settle in. If it fails down the road they will try to change the deal. Kill their deal today and we get defined contribution plans in 2 to 4 years. Vote no.
Who really thinks that the trigger will be allowed to go into effect without screaming and howling from the left? Fiscal conservatives will be demonized no matter what. It’s just a matter of when.
As Jerry Seinfeld would say “Its like a band-aid. RIP IT OFF.”
SR Murphy is incorrect with one of his statements:
“If voters reject Prop. A, we taxpayers will lose the $2.5 Billion in savings from the agreed upon concessions.”
If Prop A fails then only the concessions that HPOPS (Police) & HMEPS (Municipal) agreed
to are lost per SB2190.
HFFRRF (Fire) concessions (close to $1 billion) are still mandated per SB2190 even if the prop fails.
And to top it off, if Prop A passes, HFFRRF does not receive any proceeds from the $1 billion sale of the bonds. HPOPS gets &750 mil and HMEPS gets $250 mil.
Not sure the guys and gals of fire are in a hand shaking mood after this deal.
If you are trying to sell it ….sell it ….but be honest about it.
Yep, the folks in the fire dept. knew the collapse was coming and put their marbles to the future instead of taking pay increases in the present.
If the police and muni folks put those salary increases in savings they would be the winners. My hunch is they didn’t. If so I see a pattern…
Are you serious? Fire is not helped or hurt either way by the pension bonds?
That’s a huge lie we’ve been told. Fire is the only reason I’ve been considering voting for the bonds.
Are the firemen educated on this? They should be voting NO on principle after Turner put his hands on one of their members and threatened to fire him for not shaking his hand.
That’s a revelation to me.
Dan: “…the folks in the fire dept. knew the collapse was coming and put their marbles to the future instead of taking pay increases in the present”
That makes no sense at all. If you believe a collapse is imminent, you take the money up front and run with it, not double down by deferring compensation. For all the unsupported claims that firefighters made a conscious choice to get bigger pensions instead of direct pay, I have yet to see any convincing evidence of this. Their union and pension are two separate political entities with completely different boards of directors and agendas. You might also note that their union, the group in charge of securing better direct pay, has waged an almost constant war against city administration after city administration trying to get bigger and more frequent raises.
If they had a deal to not take raises in exchange for their luxurious pensions, you sure wouldn’t know it by how often they were at the bargaining table trying their best to obtain such raises. Just because their efforts bore little fruit makes that claim sound more like political spin in order to keep their union members happy. Can any of you provide a formal union vote to give up raises in order to get better pensions? Otherwise, I remain just as skeptical of claims that the other two pensions knowingly cut benefits in order to obtain better pay, in large part because most municipal workers have not seen a significant raise in over 30 years and I just don’t see the cops ever agreeing to such a premise.
welp Peter D. you kind of hit your own face with the door you opened didn’t you? If it makes no sense at all then why aren’t the FD folks included in the pension bond? And you did go along with the police and munis taking the higher current pay that went with not contributing as much to the pensions.
Trying to get higher pay does not negate the fact their plan is in the best shape because they got higher contributions from the city for their pensions. Care to ease the door closed and tell us how that happened?
Childish name calling aside, HFD wasn’t included because their pension was not allowed to be as under funded over the years as the others took multiple cuts to benefits. In fact, much of HFD’s under funding was due to their own market performance and the lowering of their rate of return to 7{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} from 8.5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}, each percentage point lowered increases the under funding over a billion dollars. That said, their continued failed attempts to secure higher pay speaks to the unlikelihood of a formal deal to trade such raises for better pension perks, if a deal was in place than they wouldn’t be openly trying to circumvent it.
I also pointed out that most municipal employees made no such deal since they simply have not received sizable raises, the pension cuts thrust upon them all the same, only the handful of executives working for the city making close to a public sector market amount as their minions rarely remain for an entire career any more. In similar fashion, every time the cops get their pensions cut, hundreds upon hundreds race out the door to retire or find greener pastures, this shown in spades from 2004 to this summer’s cuts, most of their remaining employees are under their continually revised pension plans that remain substandard to HFD now just as they did in 2004. If the greater pay was such an incentive to stay, why did so many leave to hold onto whatever pension perks they could each change?
Talk about a plethora pieces of knowledge. My eyes hurt. Let me swing at this.
* HFD members have always been told by their Unions, when it came time for pay raises, take smaller raises and the city would leave their pensions alone. That is why so many are so upset. They took lil to no raise to keep their pension and now their pensions were bleed with no increases. I could go on into {997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} but you could look those numbers up yourself.
*HPD members let the City borrow from their pension in lue of a raise. With the promise of repayment with interest. That is how they ended up with 10{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} pay increases over the course of several years. They also gave up the drop for new hires and increased from a 20 to 25 yr retirement along with a 401k style plan, all came with…. you guessed it another big raise…..oh yeah the old employee only had a contribution rate of 9{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} while the new guys had to pay 10.5 {997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}. That is why the new member don’t care if it passes or not, because they do not benefit from it. (Drop wise)
* Muni member although their pay is smaller they only pay 2{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} into their pension. The national average is 8{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}. The city didn’t pay their portions or deferred as it is called so that too ran up the ever increasing pension debt. The city knew they owed the pensions and chose not to fund them. Then turned around and blamed the employee groups for the whole mess. When I fact the city leaders did this.
Question: why was HFD the only group specifically not to benefit if this bond fails?
Answer: because the city knew that we would campaign against it. Especially if they would get no cuts if it failed.
Question: because we are talking pensions, which are considered long term.
What is HFD pension returns over the last 30 yrs?
Also even with the downturn of 2008/09 HFD return was not abnormal to others. Last year their return was 12{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}.
HFD has been the best fund and continues to outperform most. They were and have been treated unfairly my this and past mayors. You are right to a sense…. HFD shoulda took the money and ran. You can bet your life that from now on money will come first. If there is no money then there is no talking. Maybe they should do that before they do CPR or extricate a person. Make them pay first. Oh wait then they will be made the bad guys again. It will happen, there will be a large event, larger than Harvey, that will happen and all of a sudden people will want and need their beloved HFD. But after the theft of their benefit and estremely low wages no one will want this job. It will be a pass through job. You guys will be happy then. You reap what you sow.
Sky, a few comments from the peanut gallery, prefaced by my agreement that the city should give you a raise:
1) Your 30 year returns don’t really matter given market changes and your inability to obtain that average any more. Your pension board admitted this in the failed lawsuit when it attempted to drop the 8.5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} rate down to a little over the 7{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} the city & state imposed. While the formal figures for fiscal 2017 are not out yet, fiscal 2015 netted under 1.3{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} instead of the 8.5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} needed and fiscal 2016 actually incurred a net loss of 1.2{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} instead of the 8.5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} needed to sustain your benefits. In short, even your pension board admitted the good years do not make up for the weak years.
2) “If there is no money then there is no talking. Maybe they should do that before they do CPR or extricate a person. Make them pay first.”
Comments like that do not help public approval of your position, the threat made is clear.
3) “…no one will want this job…”
On average, over 200 people apply for every opening to HFD. If that number drops down to only 150 per opening, most of those looking elsewhere the family members of existing employees, perhaps the new blood coming in will be more willing to embrace needed changes.
4) Whatever your union leaders told you has nothing to do with the reality of the situation. It appears your union leaders lied to you, no wonder there has been a constant turnover in leadership since your members knew it too.
5) The municipal pension does not have a flat contribution rate, all members also having to contribute an additional 6.2{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} to Social Security. Group A members will be contributing 8{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} next year, Group B will contribute 4{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} for much lower benefits, and Group D will contribute 3{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} for even lower benefits as their plan is clearly a supplement to Social Security to a greater degree than the Group B plan. So the correct numbers are Group A will contribute 14.2{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}, Group B will contribute 10.2{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} and Group D will contribute 9.2{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} for various retirement accounts. If you would like to join the municipal plan, I guarantee the city would sign off on it but you’ll need Congress to override Social Security provisions that prevent public safety that opted out in the 1980’s to complete the deal.
6) The new pension deal is designed to prohibit any of the plans from lending money to the city. That is a great step forward in itself since the city has not paid such monies back in the past. Even the pension bonds do not completely repay back everything borrowed, hence the lowered benefits all of you are going to have to live with. As people under older plans quit, retire, or die, the three plans will become more affordable but nobody can predict how long the transition will take, those of you that think you can’t be replaced are in for a sad awakening as dozens scramble for your jobs.
Obviously you have all the answers. And of corse stupid FFs don’t have a clue.
Always the sideline QBs throw all the touchdowns. I tired of all the back and forth. Typical though. Nobody owning any of their doings. As you sit hi and mighty, I do wonder would you go to a dr that isn’t very good or would you prefer the best, for yourself and family? Yes, there are about 200 applicant per year. How qualified are they. In the recent past HPD couldn’t fill a class. But with your wealth of knowledge you knew that. You are no different than any other bean counter. You have it all figured out and everybody is wrong but not you, you are the one. The sent one to solve the world.
True, what happened with past Mayors wasn’t illegal but regardless they left the citizens to deal with the hole they created.
And let me be clear I did not threaten anybody. But without fail you twist the meaning around to fit your narrative. Expected though. FFs have always and will always respond to every single call. Regardless of race, gender, creed. And they will always do their job. What is wrong to expect what you signed up for? I signed up to perform certain duties and in return I’d be compensated with certain benefits. Now, because of mismanagement and 20+ years later their deal is no long good. It is kinda like if I cut your yard for $30 and after it’s cut you want to now pay me $25 because you can’t afford the agreed upon $30 due to the fact you went out to a party last night.
It is odd that you and others always seem to read into and make up ironious statement about threats and hurt feelings. And you are not even the one who is directly affected.
Oh but you will say “I am a tax payer”. Then why wouldn’t you hold your elected leader in check. Mr taxpayer? Give me a break.
Sky, the bigger issue is that nobody has all the answers. If someone had the answers, they’d know ahead of time what returns your pensions would net and the public wouldn’t be on the hook for a never ending amount of increases. After the pension legislation passed, HFD’s pension attempted to increase city contributions by over 50{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} despite telling anyone who would listen for the previous five years that they didn’t need increases. This is why a growing number of people called taxpayers want all employees switched to a defined contribution pension, you’re just lucky that when that move comes, it probably won’t be retroactive.
Also, I didn’t twist your words, I quoted your implied threat. So while you and your coworkers may think you’re the best employees to ever walk the earth, the city will make due as needed, none of your benefit cuts were retroactive so spare me the analogy of working for a promised rate that was later changed. If you think the lowered benefits moving forward are not enough, by all means apply elsewhere for a position, there were no promises of lifetime benefits without changes, even countries like Japan that used to be known for that type of employment have switched. But if you think you were personally promised specific compensation that would never change, by all means display the contract you signed because I’m here to tell you it never happened and anyone working for the public works at the whim of the electorate.
And I didn’t say there were 200 applicants a year, I said that historically speaking, 200 applicants apply for every opening. While some may not be as good as others, your implication that the difference between all of them and those hired is night & day smacks of delusional thinking. As far as HPD is concerned, they have had their benefits cut multiple times and are still lower than yours yet they seem to fill their classes just fine since they applied most of their last raise towards less senior officers. Neither group is stuck with “what they signed up for” either, your compensation has mostly increased over the last 30 years, ask your senior employees what their pension and pay was when they joined. Do you think they would give up all advances they’ve made to satisfy your desire that everyone be paid what you signed up for?
There was another post up about Rep. Murphy that I can’t seem to find now.
Help?
Hey Kevin, not sure what you are looking for. I made a couple of cosmetic changes to the website yesterday morning but they shouldn’t have affected any posts. Here’s what I get when I search for Jim Murphy:
https://bigjolly.com/search_gcse/?q=jim{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}20murphy
Thanks man. I couldn’t find the “anti-taxpayer” one when I commented, but I see it now. Maybe user error on my part, who knows.