One more week on Prop 1

The vote for City Proposition 1, which will determine whether or not Houston opts out of the constitutional amendment ratified last year to outlaw reducing pension benefits for a public employee, even if the employee was retired, is this Saturday, with early voting going on through the week. I still haven't made up my mind about this. I've heard the arguments on both sides, and whichever one I hear last sounds the most convincing to me.

This article didn't do anything to help reduce my ambivalence.

In an interview with the Houston Chronicle last week, [Houston Mayor Bill] White said he has no intention of taking money from retirees or reducing what current employees have compiled from years gone by.

He said he only wants to reduce the pension benefit going forward, to save the city from a serious financial crisis, and that he feels no guilt about it because the most generous pension changes were approved only three years ago. It's not as if someone had counted on them for an entire career, he said.

Couldn't White cut future benefits without opting out on Saturday? Pension officials overwhelmingly say yes, that nothing in the law forbids the city from negotiating for lower benefits going forward. In fact, they are prepared to do that.

But White says legal experts have told him the amendment is vague and could be challenged in court.

"I don't intend to take away any benefit that is accrued in the accounting sense," White said. "But could it mean future benefits of those already vested?"

In other words, could an employee halfway to retirement demand that his accrual rate stay the same?

Even if voters approve the opt-out, White won't be able to change pension benefits on his own. He must negotiate an agreement with the pension boards and may also need approval of the Legislature.

He may try to reduce the accrual rates going forward, rein in the returns on drop accounts and reduce cost-of-living adjustments.

If nothing is done, actuaries predict two city pension plans -- those for police and civilian employees -- will be significantly underfunded unless the city increases its contribution markedly.

Reading that closely, I can see Kevin's viewpoint. Why is Prop 1 necessary if we're only talking about future pensioners? The Mayor's point about vagueness and judiciary uncertainty does give me pause, though. How risk averse are we here? And which risk is greater, busted budgets or busted mayoral promises? I'm still working on it.

Am I the only one who finds it interesting that City Controller Annise Parker's op-ed on the pension situation never mentions Prop 1? I think all of her suggestions are reasonable, and I daresay all of them can be implemented whichever way the vote goes, but still. You'd think she'd mention the words "Proposition One" at least in passing, and I wonder what if anything is meant by their omission.

Posted by Charles Kuffner on May 09, 2004 to Local politics | TrackBack