A day of reckoning has arrived in Houston, the city’s financial stewards say, to choose between pensions and pothole repairs.
Days after voters in two California cities curbed public employee retirement benefits and voters in Wisconsin rejected an effort to recall a governor who required state workers to pay more for their pensions, Mayor Annise Parker last week said she plans to unveil a plan late this summer to “address our pension problems.”
Asked if her plan could set Houston on a course to become the next Wisconsin, where a yearlong battle has raged over collective bargaining rights and other public employee benefits, Parker said she hoped not.
“I think it is possible to craft a retirement plan for our retirees that is affordable for us, secure for them, but doesn’t put me in the dilemma as I was last year of, do I keep active city employees on the job or do I pump money into a pension system over which I have absolutely no control,” Parker said.
To pit pensions that amount to less than 10 percent of the general fund budget against active employees presents a false choice, argues Todd Clark, chairman of the Houston Firefighters’ Relief and Retirement Fund.
“We do not have a pension problem,” Clark said. The firefighters’ pension has banked nearly all of the money it needs to cover current and future retiree benefits, has agreed to relax the city’s payment schedule to defer the payment of tens of millions of general fund dollars during tough budget times, and has managed its money so well that investment income covers most of the retiree benefits, Clark said.
“The mayor is pushing reform to be able to spend that money on special pet projects, and because she has a personal grudge against the firefighters for never supporting her,” Clark said.
I fully expect this to be a soul-crushing exercise that leaves everyone involved unhappy with the outcome. I expect to be surrounded by sound bites, unreconcileable “facts”, and fatally compromised self-proclaimed “experts” with disclosure issues. Here are the two principles I plan to keep in mind as we slog our way towards a conclusion.
1. Whatever you think of the current system and its sustainability, it represents a deal negotiated in good faith with past and present employees. Any change made to this deal will have a significant, almost certainly negative effect on the lives of thousands of people who had every reason to expect that the deal they had would be honored. If you want to make a change that will only affect future employees, remember that a key aspect of the current deal is that employees have agreed to accept less pay now for more pay later. If the new deal you propose includes less pay now and less pay later, how will the city be able to attract good employees in the future?
2. Claims about “waste” in the budget without specifying what that “waste” is are meaningless. Supporters of the current system such as Todd Clark maintain that pension payments make up less than ten percent of the city’s general revenue. This is correct, and I have noted that fact myself plenty of times, but if that’s part of your argument for maintaining the status quo, you undermine your position by pointing at “special pet projects” – whatever they are; Clark never says – that for all we know don’t even amount to one percent of the city’s general revenue. If you’re going to play the game of how big a piece of the budget thus-and-such is, I will say again that two thirds of the budget is consumed by public safety, and there is no one in City Council, nor anyone who has run for Council in recent years as far as I can tell, who has advocated for a review of that spending to see if we could get by with less of it. If the lion’s share of the budget is off limits, then the scraps are all that’s left to fight over.
I have a strange premonition this will not be the last time I will feel compelled to say these things. Houston Politics has more.