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Houston Retired Firefighters Association

Pension deal approved by firefighters

It’s a big deal, though it’s hardly a done deal yet.

Mayor Sylvester Turner

Mayor Sylvester Turner

For the first time ever, the Houston firefighters’ pension board agreed Monday to accept benefit cuts for current workers and retirees, potentially paving the way for a solution to a 15-year-old crisis that has threatened to bust budgets and weaken the city’s financial stability.

By a 7-2 vote, the firefighters panel joined the police and municipal pension boards in agreeing to give up some benefits in exchange for certainty in a complex deal that would eliminate underfunding of Houston’s three retirement systems in 30 years.

The reform package, which Mayor Sylvester Turner heralded as a “historic turning point,” heads to City Council for approval on Wednesday, then to the Legislature, which controls city workers’ retirement benefits.

Although passage of the reform in Austin is far from a foregone conclusion, Turner was optimistic the deal would survive any legislative turbulence.

“For the first time ever, all three pension systems have been willing to work with the city in a very productive manner. We’re all on the same page and moving forward as a united front,” Turner said at a press conference. “We are closer than ever to solving what no one else has been able to solve over the last 15-plus years. The finish line is certainly within reach.”

The mayor’s declarations were firmer than those of fire pension chairman David Keller.

“I think it substantially moves it forward, but there’s still a lot of road to go,” Keller said. “It’s certainly no end. It’s kind of a beginning.”

A statement released by the fire fund after the vote called the agreement a “non-binding framework,” and no trustees elected by active or retired firefighters appeared at Turner’s press conference.

See here for the background. There’s a lot of talk later in the story about maybe filing a lawsuit over this – by Andy Taylor, of course, who has never turned down a possible payday – but the more immediate concern is about ensuring a bill passes through the Lege to ratify this. I have been of the opinion that if the city made a deal with the pension funds, the Lege will be willing to ratify it. That was under the assumption that none of the stakeholders would lobby against it, which may not be the case here. For now, though, I’ll stick with what I said up front – this is a big deal. Now it’s on Mayor Turner and the city’s lobbyists to finish it. The Mayor’s press release is here, and an easy-to-read executive summary of the changes to all three plans is here. The Urban Edge has more.

Pension deal takes a step forward

Not quite there yet, but getting close.

Mayor Sylvester Turner

Mayor Sylvester Turner

Houston’s police and municipal pension boards have agreed to a landmark reform package produced over months of intensive negotiations at City Hall, and Mayor Sylvester Turner hopes the firefighters fund will follow suit with a vote Monday.

The pending proposal, which puts Houston the closest it has come to solving a 15-year crisis that has contributed to recent credit downgrades and threatens to bust the city budget, would eliminate Houston’s pension underfunding in 30 years and avoid more than $2.5 billion in future costs by reducing benefits.

It would also limit the city’s exposure to future market downturns by assuming more realistic investment returns, and calls for issuing $1 billion in bonds to help close the funding gap.

The deal also includes a hotly debated provision that would require future benefit reductions or higher worker contributions if a market downturn or other factors drive the city’s contributions above a specified cap.

The next step is to take the agreement to Austin in the form of legislation, as city workers’ pension benefits are enshrined in state statute.

“We all recognize that the course we were on was going to be destructive for everyone,” Turner said, making a rare appearance at a City Council committee discussing the reforms Thursday morning. “We all had to recognize there were going to be some changes. We tried to strike a balance. Under this plan there is certainty for all employees that there’s a retirement system they can count on that is reliable and sustainable, and we do not have to have this system be a political football year after year. I wish at the end of the day we didn’t have to make any changes at all, but that would be naive and unrealistic.”

Police and municipal pension officials declined comment.

Fire pension chairman David Keller said he can see his board’s vote Monday being decided by one member, or by a wide margin.

“I wish I had a crystal ball on this, but I really don’t know. It’s just hard to gauge what the outcome would be,” he said. “We’re proceeding with a great deal of caution.”

If Keller’s board rejects the deal, city officials say it’s not clear precisely what would happen, but sources close to the talks said the mayor has made clear to the firefighters fund that intransigence on a mutually agreed deal could result in the city writing less generous terms into the legislation on the fire trustees’ behalf.

[…]

Houston Retired Firefighters Association president Nick Salem said his group accepts changes must occur, but is troubled by one of the several dozen benefit tweaks: A change that would reduce annual cost-of-living adjustments for firefighters who retired before 1997, prior to the generous benefit increases that first caused pension costs to skyrocket after 2001.

About 600 of Salem’s 3,100 members fall into that category, and he said many are near the poverty line. Retired Houston firefighters do not received Social Security benefits.

“We don’t want to get in a big fight and kill this whole deal with the city because we want a deal with the city, but we’re having severe issues with this,” Salem said. “Some retirees are living on $1,000 a month. We’re not against the deal, but we’re against this one particular part. We’re trying to figure out what we’re going to do about it.”

See here, here, and here for the background. The firefighters have always been the main challenge here, as they have the most to give up and the strongest starting position. Let’s just say there will be a lot less turbulence, here and in Austin, over the next six to eight months if they ratify the deal on Monday.