“No one can deny that that $8.2 billion unfunded liability has almost been cut in half.” Sylvester Turner, at his Saturday, March 30th campaign kickoff.
It’s not only deniable, it’s simply not true.
In reviewing Houston’s published financial reports, the City’s unfunded pension liability actually peaked at $6.1 billion in 2016, the year before “The Fix” and stood at $4.0 billion in 2018. Although that would appear be an impressive reduction, those numbers don’t include an additional $1.0 billion of pension liability created by the voter approved pension obligation bonds issued in December 2017. They also don’t include $600 million of pension obligation bond liability issued in prior years without voter approval.
The actual “unfunded” pension liability stands at $5.6 billion, nowhere near the reduction that Mayor Turner would like you to believe.
Mayor Turner will never tell you that in 2016, before The Fix, The City’s total annual pension expense stood at $878 million. In 2018, the full year after The Fix, reported total pension expenses skyrocketed to $948 million. But that’s before adding in approximately $30 million of interest expense on the new $1 billion of pension bonds. If you add interest on the new bonds, total pension expense climbs to $978 million, an increase of 11.3% in just 2 years.
We think it’s wrong for the Mayor to make up numbers that grossly overstate the impact of his so called “landmark” pension reform. We think it’s wrong for the Mayor to mislead the taxpayers into believing that Houston’s pension systems are improving when, in fact, they are not. We think it’s wrong for the Mayor to mislead city employees and current pensioners into believing their pensions are getting safer when they are not.
We think it’s time for new leadership at Houston’s City Hall. We need a Mayor who will be honest with taxpayers and City employees about the health of the City’s pension systems and the true burdens they have on overall city finances.
Bill Frazer is a Houston resident, CPA and former candidate for Houston City Controller. Craig Mason is a retired actuary and former Chief Pension Executive for the City of Houston.