Budget yes, pension plan not yet

We have a city budget, but we'll have to wait a bit longer to see what kind of pension fund plan gets hashed out.

After proposing a $3.8 billion city budget Wednesday, Mayor Bill White's administration today begins wrestling with one of its more contentious details: funding city employees' retirement program.

The mayor's chief administrative officer, Anthony Hall, and the Houston Municipal Employees Pension System's executive director, David Long, are to begin negotiating the size of the city's contribution to the retirement fund in the fiscal year that begins July 1.

Long says the mayor's proposed contribution of $75 million falls short of an agreement both sides reached in 2004. He also questions why the mayor, who must get approval of the pension fund's management on the contribution amount, placed a figure in the budget before the parties began formal discussions.

White called any assertion that he's underfunding the pension "ridiculous." He said his administration has a long-term plan to give employees more retirement options while securing the system for the future. He said the city's pension expert has been working on the issue for months.

Now he and Long must agree on a plan -- which could include changes in pension benefits -- before June 30, the deadline for the City Council to approve the budget.

"There is plenty of time between now and the adoption of the budget to reach an agreement with the pension board," White told reporters Wednesday when asked why the negotiations hadn't started sooner.

True enough, though it certainly couldn't have hurt to start sooner. On the other hand, there's nothing like a deadline to focus the mind.

The mayor's proposed $75 million pension contribution is based on the same rate of contribution to the pension as during the previous fiscal year: 15.8 percent of civilian payroll. The city paid about a $72 million contribution during the current fiscal year.

White's proposal is $34 million less than what Long says the city is legally required to pay under a 2004 agreement. It allowed the city to pay less than the full contribution for three years to deal with a $1.9 billion unfunded liability the mayor inherited when he took office.

With their divergent perspectives on the issue, getting a new agreement could be difficult. "That's a huge gap that would need to be made up," Long said. "But I'll reserve judgment until I see their numbers."

Given the lack of lost love among the principals here, this has the potential for some real fireworks. Regardless of that, I too look forward to seeing the numbers. I don't know how much wiggle room there is for Mayor White, but we'll see.

As for the rest of the budget, it sounds pretty good at first glance:

The budget includes funding for six [police] cadet classes, which could lead to a net increase of about 170 officers on the understaffed force. The mayor also set aside police overtime money to keep officers on the streets.

The Fire Department also would get money for cadets, and the firefighters would get a 5.5 percent pay increase as part of a collective bargaining agreement. Until that deal, the firefighters went several years without salary increases.

The mayor also touted new money for crime analysis, books and library materials, extended hike and bike trails and new fitness equipment in city recreation centers. The health department also would get more resources for disease prevention, he told the council.

It also includes money for traffic light synchronization, which warms my heart. Not much in the way of feedback from City Council on the budge yet. We'll see what they have to say after they've had a chance to really read the thing.

Posted by Charles Kuffner on May 17, 2007 to Local politics