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Pension bond sales proceed

But it was close, which both boggles my mind and annoys the ever-loving crap out of me.

The City of Houston can move forward with its plan to sell $1 billion in bonds on Friday as part of Mayor Sylvester Turner’s landmark pension reform passed by the Texas Legislature earlier this year, a judge ruled.

State District Judge Mark Morefield on Thursday denied a request by former city housing department director James Noteware for a temporary restraining order to delay the issuance of the bonds.

The request for the restraining order was part of a lawsuit filed last Friday by Noteware, who alleges the city misled voters into approving the bonds so it could sidestep a voter-approved limit on how much property tax revenue Houston can collect. Noteware claims the ballot language was “materially misleading” and did not include wording to indicate the taxes levied to pay off the bonds would be exempted from the 13-year-old revenue cap.

City officials say the language cited by Noteware is boilerplate included to assure bondholders that the city would meet its obligations.

[…]

Morefield said there were “substantial” concerns regarding the legality of the ballot measure, but that he ultimately agreed with the city’s argument that delaying the issuance would significantly damage Houston’s standing among creditors and bondholders.

“I think we’re just too far down the road at this point in time to stop this train,” Morefield said. “The mayor and City Council are heavily invested in this. And this thing is going to go forward.

“They may have to pay a heavy consequence for it going forward,” he added.

See here for the background. The sale has been completed, so at least that’s one rabbit hole we won’t go down. Let me see if I can sum up all the reasons I am gobsmacked by this.

1. As a reminder, the city was only obligated to put the bond sale to a vote because that was a provision in the Senate bill that required it. Mayor Bill White sold pension obligation bonds for five years without anyone demanding a vote. The reason we voted is because Paul Bettencourt insisted on it. What does he have to say about this?

2. Proposition A passed with 77% of the vote. There was essentially no opposition to it – conservative groups like the C Club endorsed it, while the Harris County Republican Party declined to take a position. Nobody raised any objections to the ballot language, which was approved by Council in August, and nobody made this case about the stupid revenue cap before the election.

3. Specifically, James Noteware appears to have taken no action regarding Prop A before the election. Go ahead and do a Google News search on him – there’s nothing relevant to this before he filed his lawsuit. He couldn’t be bothered to put out a press release, or throw up a webpage, to outline his objections before the vote. Yet here he comes afterwards to overturn a valid election that no one had any problems with because he didn’t like the pension deal?

4. I mean, there are issues with the whole referendum system, but look: Mayor Turner won an election in 2015 on a promise to get the Legislature to pass a bill to reform the city’s pension system. Our elected legislators passed such a bill. Our elected Council members ratified that agreement, then voted to put the required bond measure on the ballot, which the voters then overwhelmingly approved. What the actual hell are we doing here? Why does none of this matter?

deep breath Anyway. I hope we get a future story that includes some quotes from legal experts who can analyze the merits of the lawsuit and its likelihood of success going forward. I can rant all I want but it’s in the hands of the judges now. Lord help us all. The Mayor’s press release has more.

No charter amendments on the fall ballot

Just bonds, school board and HCC races, and the mostly boring constitutional amendments. Oh, and Heights Alcohol 2.0, if you live there.

Mayor Sylvester Turner

Houston voters will face $1.5 billion in city bonds and nine community college or school board races this November, but will not be asked whether to give firefighters a pay raise or change the pension plans given to new city employees.

Monday was the last day on which candidates could file for the November ballot, and on which local governments could call an election. That means the clock ran out on the citizen-submitted petitions seeking the change in city pensions and backing the firefighters’ push for pay “parity” with police officers of corresponding rank.

There are exceptions to Monday’s deadline. Houston ISD trustee Manuel Rodriguez’s death in July means candidates looking to fill his seat have until Sept. 6 to file for office. Candidates who meet today’s filing deadline also can withdraw from the ballot as late as Aug. 28.

In broad terms, however, the fall election campaign is set.

[…]

State law sets no deadline by which petitions seeking changes to a city charter must be tallied.

“We’ve always done first one in, first one out,” City Secretary Anna Russell said late Friday. “We are still working on the 401(k) (petition) as we do our regular work.”

The petitions, if validated by Russell’s office, could be included on a May ballot.

And I think that’s fine, and will likely allow for a more focused discussion of that issue as there won’t be anything else for Houston voters to consider; the 401(k) item no longer has anyone advocating it, so the pay parity proposal would be all there is. Given the lack of city elections on this November’s ballot, it’s not clear that a May 2018 referendum would have much less turnout, especially if both sides spend money on it. I’m sure the firefighters wanted their issue to be voted on now, but having to wait till May is hardly an abomination.

I hope to have a finalized list of candidates for HISD and HCC soon. HISD has some candidate information here, but there’s not a similar page for HCC. I’ve got a query in to find out who’s running for what and will report back later. I’m starting on the interviews for 2017, and will have an Election 2017 page up in the next week or so.

Firefighters complain about petition counting process

Oh, good Lord.

Mayor Sylvester Turner

Houston firefighters are accusing Mayor Sylvester Turner of standing between them and a voter-approved pay raise by failing to ensure a petition they submitted last month is certified in time to appear on the November ballot.

Turner rejected any suggestion that he has involved himself in the City Secretary’s effort to verify their petition, and his office on Thursday said an offer by the fire union to cover any staffing costs needed to count their signatures is being examined as a possible attempt to improperly influence a public official.

[…]

Houston Professional Fire Fighters Association Local 341 president Marty Lancton accused the mayor of seeking to run out the clock, and said the speed with which firefighters gathered the required 20,000 signatures shows that voters want a say on the matter quickly.

“The mayor has the ability to provide Anna Russell with the resources with which to count this. He has not done it,” said Lancton. “I’m simply trying to find a way to get these counted. Firefighters are just asking for fair treatment and for there to be a resolution.”

The mayor dismissed the criticism.

“She’s the one who’s doing the counting, she verifies the signatures. That’s the process,” Turner said. “No one runs the city secretary’s shop but the city secretary.”

[…]

Accusations aside, Turner said that he is proceeding as if the item will reach a November vote, and has worked to get his message out by appearing on radio programs and discussing the issue publicly. The annual cost of the proposal, he said, could be “well north of $60 million.”

Russell, for her part, said neither the mayor nor anyone from his office has spoken to her about the matter. The process of verifying signatures, she said, must be completed in the spare minutes between her staff’s daily tasks of preparing ordinances, motions, contracts and the council agenda.

My head hurts. Why don’t we just assume that Anna Russell is going to do the job she’s been doing since God was in short pants and give her some room? If for some reason she can’t get it done in time for the filing deadline for November, then get it done for next May. Am I missing something here?

David Feldman, a former city attorney who is representing the fire union, said Russell should make an exception in this instance because he views the pension-related petition she now is reviewing as irrelevant.

That petition, which was submitted in April, calls for all city employees hired beginning next year to be given pensions similar to 401(k)s rather than traditional “defined benefit” pensions. Turner’s pension reform bill that passed the Legislature this year, however, specified what pension new hires would receive, Feldman said, and state law trumps local charters.

“If, in fact, they have 20,000 signatures and she certifies it, it can’t go on a ballot because it’s an unlawful measure,” Feldman said. “That’s where the tipping of the scales comes into play. That communication can be made to her. It obviously has not been made to her.”

Bernstein said Feldman’s reading is wrong. He pointed to a similar case out of Galveston in which the court ruled that a city secretary had a “ministerial duty” to validate a petition and forward it to the City Council, notwithstanding her view that its content conflicted with existing laws.

State law “does not give the City Secretary any discretionary duties,” a state appellate court held in that case. “Any complaints about the proposed amendment’s validity will be decided only if the voters approve the proposed charter amendment.”

Feldman stepped into the anti-HERO petition counting efforts in 2015, insisting that they needed to be checked for fraudulent signatures after Russell had certified that there were enough of them. Seemed like a reasonable argument at the time, but as we know the Supreme Court did not buy it, on grounds of those “magisterial duties” which dictated that she count ’em and that was that. And to answer my own question above, the one thing that could prevent the firefighters’ referendum from getting a vote in May would be having some other charter amendment on the ballot this fall. I had been wondering about that other petition effort, since the originator of it has since said the passage of the pension reform bill – the same one that has the firefighters so upset now – made her effort unnecessary. But if they still need to be counted, then I don’t know what happens next. Like I said, my head hurts.

Do we really have to have a pension bond vote?

So as we know, the Houston pension reform bill that passed contains a provision that requires a vote on the pension obligation bonds that Mayor Turner intends to float as a down payment. Pension obligation bonds have been floated in the past, by Mayor White, without a vote, but for whatever the reason some members of the Senate insisted on it, so here we are. Now it turns out that with interest rates likely to increase later in the year, waiting till after a vote in November to float the bonds will cost the city millions in extra payments. You would think the responsible thing to do would be to float them now while it’s less expensive, and so Mayor Turner has suggested that as a possibility.

Mayor Sylvester Turner

Mayor Sylvester Turner did not rule out Wednesday issuing the $1 billion in bonds that are central to his pension reform deal without a public referendum, a move that would sidestep a hotly debated requirement the Legislature added to ensure passage of the city-negotiated plan.

Turner said he and his staff are proceeding as though there will be a referendum, but the mayor said he may seek to issue the bonds without a vote if he can gain consensus among City Council members, state lawmakers and others that moving more quickly would benefit the city.

Specifically, he referenced the benefit of preempting an anticipated jump in interest rates. Waiting six to nine months to issue the bonds, the city finance department estimates, could cost taxpayers $135 million to $273 million more over the life of the debt.

“I find it highly unlikely that anything is going to take place other than the vote in November, and that’s how we’re proceeding,” Turner said. “If we can all agree on a certain course and it may be able to expedite things, then we’ll do that.

“I’m talking about agreement with everybody. We’ve come this far with everybody, both on the local levels as well as on the state level and my approach is to always move in collaboration with everyone. But if not, then we’ll proceed with the vote.”

[…]

Though much of the rhetoric surrounding the bill during legislative debates referenced that voters would have a chance to weigh in, the mayor’s team simply points to the text of the legislation as proof that they can proceed without a vote.

Current state law requires only that City Council enter into agreements with the pension funds that are to receive the bond proceeds – in this case, the police and municipal workers’ pension funds – in order to issue the bonds. The reform legislation adds the referendum requirement, but also states that the referendum provision applies only to those agreements signed on or after the effective date of the bill, which is July 1.

Turner plans to bring those agreements to council June 21, city officials said. Though adopting them would in no way obligate the city to issue the bonds without a vote, doing so would preserve that option.

Now you’d think the prospect of saving a couple hundred million bucks would appeal to pretty much everyone, but at the mere mention of this, several self-styled fiscal conservatives immediately contracted the vapors – seriously, CM Mike Knox walked out of the committee hearing upon being presented with this – so that would seem to scuttle the “if everyone is on the same page” possibility. And indeed, Mayor Turner has now walked back the idea and reassured everyone that we will indeed have a referendum, whatever the eventual cost may be. I get that not having a vote when everyone thought there was going to be a vote seems bait-and-switch-y, but 1) having a vote was not a requirement until people like Paul Bettencourt made it a requirement, and 2) interest rates are gonna go up, so it’s going to be more expensive to wait. But a deal’s a deal, so here we are. Hope everyone’s happy.

Firefighters sue over pension reform law

I suppose this was inevitable.

Mayor Sylvester Turner

Houston’s firefighters pension fund has sued Mayor Sylvester Turner and numerous city officials over the pension reform plan Gov. Greg Abbott signed into law Wednesday, putting up another potential hurdle in Houston’s efforts to solve a 16-year fiscal crisis.

The Houston Firefighters Relief and Retirement Fund argues in the lawsuit filed Tuesday in state district court that the reform plan undercuts the board’s legal authority to “select legal counsel and an actuary and adopt sound actuarial assumptions,” in violation of the Texas Constitution.

The pension board also is asking the court to permanently block the city from acting as though the reforms will become law July 1.

If successful, the lawsuit could throw a wrench into the city’s plan to pay down its $8.2 billion pension debt over 30 years by issuing $1 billion in pension obligation bonds, cutting retiree benefits by $2.8 billion and capping future costs, even if the market dips.

“Our board is already being asked to knowingly violate its duty to the Texas Constitution through provisions contained in SB 2190,” pension board Chairman David Keller said in a statement. “We will not collude in an act we believe to be illegal.”

Turner was confident the pension board, which lobbied unsuccessfully against the reform plan in Austin, also would fail to block the reforms in court. Turner added that he finds it interesting the pension board did not sue the state.

State lawmakers, who control the fire pension, had to approve Houston’s pension reform plan.

“I think at some point in time you’ve just got to stop digging a hole,” Turner said. “I think they need to do what’s in the best interest of the people they claim to represent, firefighters both active and retired. But it’s their call. We feel very comfortable about the legislation.”

The injunction the fire pension board seeks presumably would extend not only to the reform package, the cornerstone of Turner’s policy agenda thus far,but also to the city budget for the fiscal year that starts July 1, which City Council passed Wednesday.

[…]

Charles “Rocky” Rhodes, a constitutional law professor at South Texas College of Law Houston, said it is difficult to say whether the fire pension’s challenge will be successful.

“This case is bringing issues of first impression regarding what benefits are guaranteed to pensioners by the Texas Constitution,” he said. “There are just some very novel issues that are involved that make it hard to predict what the final outcome will be.”

The suit was filed before Abbott signed the bill, not that that really matters. As we know, I Am Not A Lawyer, so I can’t give an educated opinion about the merits of this lawsuit. I can say that with some lawsuits, I feel like I have a fairly clear understanding of what the suit is about. With this one, I guess the HFRRF is saying that the pension reform law is in conflict with other state laws and/or some provisions in the Constitution? It must be something like that, because otherwise I don’t see how the HFRRF board’s authority can override state law. The fact that I don’t really get this doesn’t mean the firefighters won’t prevail – the Lege is hardly immune from writing bad or sloppy laws. More to the point is whether or not they can get an injunction, which would put the city in a bad position while the suit is being litigated. Here, I think the city has a pretty damn convincing argument that the harm to the city and its employees and the taxpayers would greatly outweigh the harm to the HFRRF, but this is what they pay the actual lawyers for. I figure we’ll have an answer to that sometime before the July 1 implementation date.

On to the revenue cap

With one major accomplishment (basically) finished, Mayor Turner moves on to the next major challenge facing him.

Mayor Sylvester Turner

“This is the most consequential campaign of the mayor’s career,” University of Houston political scientist Brandon Rottinghaus said. “These things are more complicated and more politically fraught than either his mayoral campaign or the lobbying to get the pension bill passed to begin with, and those were both complicated.”

Turner has made his own climb steeper by pledging to ask Houstonians to repeal a voter-imposed cap that limits what the city can collect in property taxes. That rule is a lightning rod for conservatives, who spearheaded its passage 13 years ago.

[…]

Turner thanked city employees for shouldering $2.8 billion in cuts to their retirement benefits, and said it is now time for all Houstonians to join in sacrificing for the good of the city. The revenue cap, Turner said, hurts the city’s credit rating and hamstrings its ability to provide sufficient services and compete on a global scale.

Many conservatives don’t see it that way, arguing that the cap protects taxpayers and gives the city an incentive to operate more efficiently.

The Harris County Republican Party plans to campaign against Turner’s repeal effort, and is expected to have company.

Voters approved the revenue cap in 2004, limiting the annual growth of property tax revenue to the combined rates of inflation and population growth, or 4.5 percent, whichever is lower. Voters tweaked the rule in 2006, allowing the city to raise an additional $90 million for public safety spending.

Houston exhausted that breathing room in 2014, and, with property values still on the rise, has had to trim back its tax rate each fall since to avoid collecting more revenue than allowed.

Despite the cap’s complexity, conservative political strategist Denis Calabrese said he doubts there will be a shortage of voter education on the issue.

“Voters will come into that election very well informed and knowledgeable and they’ll be able to express their opinion,” he said. “The predisposition going into this is that voters don’t support the repeal of the cap, and we’ll see if that changes as a result of the education efforts on both sides.”

You know that I support repealing the cap. The question is how to sell that idea. I agree that the predisposition is likely to be to keep it, though I’d argue that most people know very little about the cap. I’d approach this primarily as a plea from Mayor Turner, as part of his overall plan to get the city’s finances in order. Have him say something like “I promised you I’d get a bill passed in the Legislature to rein in pension costs, and I did that. But the work isn’t done just yet, and I need your help to finish the job. The revenue cap limits Houston’s economic growth and lowers our city’s credit rating. To really get our finances in order, we need to repeal it.” You get the idea. Basically, the Mayor has as much credibility with the voters right now as he’ll likely ever have. That’s a huge asset, and he should leverage it.

Alternately, if the local GOP is going to oppose repealing the cap, then one might keep in mind that the city is much more Democratic than it is Republican, so if this becomes a partisan fight then the Mayor has a larger pool of voters available to him. There are also a lot of potential villains to demonize in such a campaign, from the President on down. This would almost certainly be the kind of low-information, high-heat campaign that makes newspaper columnists wring their hands about civility and discourse, but it would get people to the polls. I’d take my chances with it.

One more thing:

Meanwhile, the City Secretary is reviewing a petition that calls for a vote on giving 401(k)-style retirement plans to all city workers hired after the start of next year, which employees view as insufficient.

Conservative activist Windi Grimes, an organizer of the effort, however, said her group thinks sufficient fiscal safeguards were added to the pension bill passed in Austin, and will not mount a campaign behind the petition.

See here for the background. Is there a provision to allow for submitted petitions to be withdrawn? That would be the better option if the proponents of that idea are no longer interested in advocating for it.

Houston pension reform bill passes

It’s done.

Mayor Sylvester Turner

The Texas House on Wednesday approved the controversial Senate version of a bill that aims to overhaul Houston’s failing pension funds — over the passionate objections of current and former firefighters.

Senate Bill 2190, which passed in a 103-43 vote, now heads to Gov. Greg Abbott’s desk. But the months of rancor between firefighters and Houston officials promise to linger long after the legislative session ends Monday.

[…]

The Houston bill passed Wednesday without two amendments the House had previously added in an apparent attempt to appease firefighters. One amendment would have prevented the bill from impacting current firefighter retirees. The other could have allowed the firefighter pension system to bear a smaller burden in paying down unfunded liabilities shoring up billions in shortfalls in three city employee retirement funds.

That drew the anger of firefighter pension members, dozens of whom sat in the House gallery Wednesday. Some shouted down to representatives as they walked out after the vote. One woman could be heard yelling, “Shameful!”

After the vote, Houston firefighter pension board chairman David Keller said he was disappointed in the vote. During the session, pension officials had suggested such legislation could be unconstitutional because it determines the financial boundaries the fund should stay within. Keller said the Constitution says that power is left solely to the pension board.

Keller said it was too soon to determine if the pension board will file a lawsuit.

“We will explore every option available to us,” he said.

But state Rep. Dan Flynn, who carried the bill in the House, said that killing the bill because firefighters remained unhappy would have exasperated the dire financial situation the city and the retirement funds are experiencing. The bill addresses pensions for firefighters, police and municipal employees.

“If we don’t pass it, there won’t be any pensions,” the Canton Republican told The Texas Tribune earlier this year.

Rep. Dan Huberty, R-Houston, authored the amendment that could have helped the firefighter pension fund bear less of the burden shoring up the city’s shortfalls. The amendment would have given pension officials more time to provide data showing that financial forecasts estimate the fund will be in better shape than Houston officials estimated.

But on Wednesday, he urged his colleagues to vote for the bill without the amendment.

“We’ve done everything we can to work hard in good faith,” Huberty said.

Keller, the pension chairman, said the pension board offered to provide the data under licensing agreements that included confidentiality provisions. He said the city never responded.

When asked if firefighters would campaign against any Houston-area state officials who backed the bill, Keller said “it’s hard to say.”

“But I know the firefighters are having a lot of emotions right now: loss, anger,” he said. “And they’ve been shown to be politically active.”

See here for the background. The firefighters are gonna do what the firefighters are gonna do. I get they’re unhappy and to an extent I don’t blame them, but this is where we are, and it took a lot of effort to get here. At this point, the main thing I’ll be looking for is who will be campaigning against the pension obligation bonds. It’s one thing to say we need to vote on those things (even if we hadn’t voted on them before), it’s another to say we should vote against them. Until then, kudos to all for getting this done, and congratulations to Mayor Turner for doing what once seemed to be impossible. The Mayor’s press release is here, and the Chron has more.

UPDATE: Here’s the longer Chron story.

House and Senate concur on pension bill

One more vote in each chamber, then it’s on to get a signature.

Mayor Sylvester Turner

The Legislature is expected to take its final votes on Houston’s pension reform legislation within days after a group of House and Senate lawmakers Sunday night hashed out the differences between their chambers’ versions and produced a final bill.

Stripped from the proposal that emerged Sunday evening were three amendments backed by firefighters and opposed by City Hall, said state Sen. Joan Huffman, a Houston Republican who carried the measure in the upper chamber and who was among the 10 lawmakers tasked with reconciling the bills. The excised amendments had been added earlier this month when the House followed the Senate in approving its version the reform package.

“It’s a great bill that’s good for the taxpayers, for retirees and for the employees,” Huffman said late Sunday. “I think it is a good solution.”

The development puts Mayor Sylvester Turner on the doorstep of a landmark achievement that he has made the central focus of his first year and a half in office and that aims to end a 16-year crisis that has increasingly imperiled the city’s finances.

“There is only one step left for the Legislature to take,” the mayor said late Sunday. “Houston needs their support for our police officers, municipal employees, firefighters and Houston taxpayers. We cannot afford to fail. I believe the Legislature won’t let us down.”

See here and here for the background. Basically, it sounds like the original Senate version of the bill was restored. The firefighters aren’t happy with the loss of the House amendments, all of which benefited them, but that’s the way it goes. There are no guarantees in this world, but this looks pretty set for passage.

Bill King wants you to lower his property taxes

That’s not what he says in this op-ed, but it is the effect of what he’s arguing for, even if he’s not honest enough to come out and say it.

Let’s start with the basic point that despite King’s disingenuous attempt to rebrand it, what the city has is indeed a revenue cap and not a property tax cap. The mechanism that causes the cap to kick in is a combination of inflation and population growth, and if the city’s total revenue from one year to the next exceeds that combination, the cap gets enforced, which has so far always meant a reduction in the property tax rate. My point is that it doesn’t have to be an increase in property tax collections that triggers the cap. If sales tax collections were sufficiently robust, it could tip the revenue increase past the limit. If population growth plus inflation, which together have at best a small influence on the city’s expenses, are sufficiently small then even a modest increase in revenue could cause the cap to come into play. The factors that define the cap have basically nothing to do with the things that drive the city’s finances.

What the revenue cap does above all is prioritize property tax cuts over anything else the city might choose to do. If in a flush year the city wanted to pay down some bond debt or make an extra payment into the pension funds, well, too bad. The cap says the city has to cut the property tax rate, which doesn’t just affect the flush year in question. The reduced rate remains in place, thus hampering the city further in bad times like we just experienced. It also takes the option of increasing the tax rate off the table, which is one reason why Mayor Parker raised fees so much. These are the policy decisions that get made when policy options are artificially limited by bad laws. The effect of the cap is especially pernicious when the city is recovering from down years, as it is now, because even the process of revenues getting back to previous levels after falling due to a bad economy can trigger it. Every candidate for office in Houston I have ever interviewed has talked about spurring economic growth to improve the city’s bottom line. The revenue cap puts a limit on how much that growth can be leveraged. Why would anyone think that’s good policy?

And let’s be clear about who the main beneficiaries are when these forced property tax cuts are enacted: Wealthy property owners like Bill King. Renters get nothing, while owners of lower-priced houses get nominal reductions. It’s only once you get up int seven figures and more that the cuts start to add up. To be sure, it’s still not that much, mere pocket change to the beneficiaries, but the point is that the lion’s share of those benefits go to those who have the most to begin with.

Which brings me back to my main point. If Bill King thinks this dumb law is really good public policy, even if ratings services that he likes to cite when he argues about how to fix the city’s finances think it’s a dumb law, then fine, he’s allowed to argue for it. But just as people have been asking how much Donald Trump would benefit from the tax “reform” plans that are being floated by his administration and its Congressional enablers, we should ask how much he himself has benefited in recent years from the coerced property tax rate cuts that he wants us to go along with. The least he can do is tell us how much this policy that he advocates will add to his own bottom line.

UPDATE: King insists in the comments and via email that “other revenue sources” like sales taxes don’t trigger the charter amendment. Fine, whatever. This does not change my point that the revenue cap is a stupid idea, nor that people who have benefited from it, like Bill King, should be honest about that when they advocate for its continued existence.

Senate rejects House changes to Houston pension reform bill

Conference committee, here we come.

Mayor Sylvester Turner

The Texas Senate on Wednesday refused to concur with House-passed amendments to a reform bill designed to resolve financial problems for Houston’s pension system.

Sen. Joan Huffman, a Houston Republican who is the author of the legislation, said the House changes would be too costly and would derail a tentative agreement brokered by Houston Mayor Sylvester Turner.

Huffman, saying the passage of the bill “is absolutely essential to the city’s future,” said one of the House amendments alone would add an additional $26.7 million to the cost of the reforms, an unaffordable amount.

Huffman was appointed chair for Senate negotiators assigned to negotiate a final version of the bill, joined by Sens. Jane Nelson, Charles Schwertner, Kelly Hancock and Carlos Uresti.

See here for the background. The amendment in question was authored by Rep. Dwayne Bohac; the Chron called for its removal, so there’s that. My guess is that the final version of the bill will be more or less the Senate version, and it ought to be approved without too much difficulty.

Mayor Turner’s second budget

It’s about what you’d expect.

Mayor Sylvester Turner

With pension reform in sight, Mayor Sylvester Turner on Tuesday proposed a combination of departmental cuts, one-time fixes, deferred payments and a dip into city reserves to close next year’s $123 million budget gap.

Turner aims to erase the deficit with $51 million in spending cuts – largely from police and fire overtime – $35 million in one-time revenues or deferred payments, and $38 million drawn from city reserves. The mayor said he anticipates eliminating vacant positions across departments and making fewer than 10 layoffs.

The proposed $2.38 billion general fund budget for the fiscal year that begins July 1 is about $35 million more than this year’s spending plan, due in part to a $51 million spike in debt costs.

“Like anything, there are limited dollars, and I think what the public expects for us to do is to operate in a very prudent fashion,” Turner said. “I think we have submitted a budget that can at least maintain our core city services.”

The city’s budget projection is predicated on the state Legislature’s passage of Houston’s pension reform deal with a two-thirds majority and Gov. Greg Abbott’s subsequent approval, which would put the changes into effect at the start of the fiscal year.

The mayor has said the budget gap would increase to roughly $234 million without pension reform, potentially requiring hundreds of employee layoffs.

The deficit also would grow if the Legislature passes the pension bill with some of the House’s amendments attached or with less than a two-thirds majority, which would delay implementation until September.

This year’s budget is similar in nature to last year’s, and I expect that the Mayor will have little tolerance for amendments that include any new spending. I assume he has a Plan B budget in his back pocket in case the Lege doesn’t fully cooperate, and I’ll be fine with never seeing it. From here, it’s on to getting the pension obligation bonds ratified and lifting the revenue cap, which if nothing else ought to make next year’s budget a little less painful. Here’s hoping.

House passes pension reform bill

One step closer, though there are still issues to be worked out.

Mayor Sylvester Turner

The Texas House gave early approval Monday to a bill that would reform Houston’s three problematic pension funds, which have caused financial woes and spurred political battles for years.

The 112-28 vote for Senate Bill 2190 came after lawmakers made some key changes to the bill, including a provision that could let the firefighter pension fund bear a smaller burden for shoring up billions in shortfalls.

But State Rep. Dan Flynn, R-Canton, who authored the House version of the bill, worried that the Senate may not like the changes.

“This is an amendment that could very well derail the bill,” Flynn said Monday from the House floor.

[…]

State Rep. Dan Huberty, R-Houston, successfully got his House colleagues to amend the bill so that the firefighter pension fund has an opportunity to lower what its members give up in order to help close a large funding gap.

For months, city and state leaders have accused the firefighter pension fund of withholding actuarial data that would prove it could shore up its shortfall with fewer cuts to members’ benefit features. In the absence of such data, city leaders and state lawmakers put together SB 2190 and a House companion — authored by Flynn — that the firefighters opposed.

Keller said the retirement system wants to protect individual members’ information and has offered the city data under licensing agreements that included confidentiality provisions. He said he was surprised that became an issue on the House floor considering all firefighter salary information goes through City Hall.

“They know what each of us makes,” he said. “There’s nothing surprising in our data we hold.”

Huberty’s amendment will give the firefighter fund a deadline to provide the data to the city. It passed 90-42 over the objections of Flynn, who said the firefighter fund had months to help reach a compromise and that such a change could sink the bill when it goes back to the Senate.

“At this point it’s really too late to change the critical aspects of this bill,” Flynn said.

Flynn could have brought his House bill to the floor but chose instead to have a vote on the Senate version. I’m guessing he thought it might be easier to get it through, as if it had been passed unamended that would have been it. It will now go through a conference committee, so we’ll see what the final version says. At this point, I’d say it’s looking pretty good for passage, though it remains to be seen who will wind up being less happy about it than they were going in. The city’s press release is here, and the preliminary Chron story is here. I’ll link to the full story in an update.

UPDATE: Here is the full Chron story.

Revenue cap will be on the November ballot

Here it comes, assuming the pension reform bill doesn’t get mugged in a dark alley.

Mayor Sylvester Turner

Mayor Sylvester Turner plans to ask voters to lift Houston’s cap on property tax collections in November, a move that could loosen one of the city’s primary fiscal constraints as it confronts still-hefty pension and debt costs that leave little breathing room to maintain city services.

The referendum would fulfill the mayor’s pledge to try to overturn the revenue cap if he succeeded in reforming Houston’s pension systems.

“Repealing the revenue cap means a better credit rating for Houston and lower costs for taxpayers when we finance improvements to the city buildings, parks and libraries that serve our neighborhoods, aging fleet, bad streets, illegal dumping and deferred maintenance,” Turner told an audience of 1,400 Thursday at his annual State of the City address. “We must achieve sustainable structural budget balance by making sure that our recurring income is equal to or more than our recurring expenses, and in fact, we must always seek ways to reduce our expenses.”

[…]

Houston’s pension reform deal as passed by the Senate includes a requirement that voters approve the $1 billion in bonds Turner plans to inject into the under-funded police and municipal pensions. The bonds would not require a tax hike, but the bill would reverse the groups’ benefit cuts if voters reject the bonds.

Meanwhile, a petition submitted two weeks ago that is being reviewed by the City Secretary calls for a public vote to require a shift to 401(k)-style defined contribution plans for all city workers hired after the start of 2018.

Lifting the revenue cap, on the other hand, would increase homeowners’ property taxes. The owner of a $200,000 Houston home saved about $84 in taxes over the last three years, costing the city an estimated $220 million in revenue.

“You’re risking a lot by putting two potentially inflammatory items on the ballot that could stimulate an anti-Turner vote,” University of Houston political scientist Brandon Rottinghaus said, noting that he thinks the pension obligation bonds alone would pass. “But if you put in bond plus revenue cap, that’s a bitter pill that conservatives would have to swallow all at once.”

Harris County Republican Party Chair Paul Simpson said the party has not decided whether to back the issuance of pension obligation bonds, but it already has committed to campaigning against lifting the revenue cap.

“Without that cap there, there will be the inevitable pressure to solve every fiscal problem by raising taxes,” Simpson said. “It’s the best tool we have to actually impose fiscal discipline on the city.”

Turner appeared undaunted by the prospect of a financially weighty ballot.

“Protection – it’s not free. Police officers are not free. … Firefighters are not free. People who are fixing our streets – they are not free,” he told reporters after his speech at the downtown Marriott Marquis hotel. “When people have a need, they want the city to respond. Well, we want to respond.”

I’m all in on this, as you know. My preference would be to go for full repeal, though what the Mayor has generally talked about is building in an exception for public safety. Which I can live with, given that revenues tend to be fungible, but the honest and future-lawsuit-proof path is to ditch the stupid revenue cap altogether.

The likely presence of a pension obligation bond referendum on the ballot doesn’t strike me as a problem, as both items can be sold together as a package deal to get Houston’s finances on firmer ground. And if the people who are now insisting that we vote on the pension obligation bonds then show their true colors by opposing those bonds, well, now we’ve got a villain to run against. The Mayor can campaign for them by sending Greater Houston Partnership types out to the wealthy neighborhoods to talk fiscal responsibility, and he can send Democratic partisans to the clubs and other receptive audiences to tell them to send a message to the out of touch Republicans in Austin that they can’t meddle in our city. I’d feel pretty good about our chances with that kind of campaign.

It’s a different question whether Metro will want to join in and put its own referendum on the ballot as well or wait till 2018. There’s a case for waiting and a case for action, and I’m glad it’s not my decision to make.

Senate passes pension reform bill

Progress.

Mayor Sylvester Turner

Houston’s pension reform package passed the Texas Senate by a 25-5 margin Monday, as a possible political blockade dissolved to provide the landmark proposal a speedy passage.

Mayor Sylvester Turner’s reforms now await a hearing in the state House on Saturday.

“I believe this current version is our best chance at significant pension reform and, members, be assured: This is significant pension reform,” said Sen. Joan Huffman, the Houston Republican who carried the measure in the upper chamber. “Without this reform, the city might head toward bankruptcy.”

Sen. Paul Bettencourt, another Houston Republican, had indicated he planned to offer an amendment to allow voters to impose 401(k)-style “defined contribution” plans on future city employees, which worker groups view as providing insufficient security in retirement.

Bettencourt stood down and praised the final version of the legislation, however, thanks to a compromise — negotiated among business groups, city leaders and pension officials over the weekend — that added a pathway to “cash balance” plans, a typically less generous type of traditional pension plan.

New hires would be forced into those plans only if the existing pensions financial health eroded to a specified point.

Here’s the Mayor’s press release. I’m sure there will be a longer Chron story this morning – I’ll link to it when it’s up – but this is sufficient for now. This “failsafe” that was grafted on as an alternative to the Bettencourt forced-401(k)-vote amendment, which bubbled up to the surface over the weekend, may or may not ever amount to anything and I’m not sure what I think of it, but it’s probably better than the Bettencourt amendment, so I’ll take it for now.

The House companion bill is on the calendar for Saturday, so this is where the rubber meets the road. This bill already differs in that it doesn’t have the provision requiring a vote on the pension obligation bonds. We’ll see what happens with this amendment as well. The Trib has more.

UPDATE: Here’s that longer Chron story.

Pension reform bill passes House committee

Two for two.

Mayor Sylvester Turner

Houston’s pension reform bill will now move to the floor of each legislative chamber after a Texas House committee joined its Senate counterparts in passing the measure 6-1 Wednesday.

With Rep. Roberto Alonzo, D-Dallas, opposed, the pensions committee adopted House Bill 43, which will now head to a scheduling committee to be set for its next hearing.

“I am thankful to the committee members and Chairman Dan Flynn,” Mayor Sylvester Turner said in a prepared statement, referencing the Dallas-area Republican who oversees pension discussions. “Our solution continues to make historic progress in Austin. I am happy to see that our state lawmakers understand how important this is to Houston’s future. We are going to keep up the pressure until our plan becomes law.”

Houston Republican Sen. Joan Huffman’s committee passed the bill last month by a similar margin of 7-1. The main difference between the bills is that Huffman’s version seeks a referendum on pension bonds such as the $1 billion in bonds that are a key part of the reform package; the House version does not include that language.

See here and here for the background. The easy passage in the House committee, coupled with the passage of the Huffman bill in the full Senate, bodes well for the reform effort despite the opposition from the firefighters. Assuming HB43 does pass the full House, either it will need to go through the Senate or Sen. Huffman’s SB2190 will have to pass the House. The matter of whether or not to require a vote on the pension obligation bonds will be worked out one way or the other, and then we’ll go from there.

Firefighters will oppose pension reform bill

So it goes.

Mayor Sylvester Turner

Hopes that Houston’s firefighter pension board might agree to a compromise set of benefit reforms and end their opposition to Mayor Sylvester Turner’s landmark reform package proved too optimistic, after the two sides passed a Thursday deadline without a deal.

It remains unclear what effect counting the firefighters as confirmed foes will have on the bills now working their way through both chambers of the Legislature.

The Houston Firefighters Relief and Retirement Fund had joined police and municipal worker groups in backing preliminary terms last fall, but did not join their counterparts in agreeing to final legislative language.

Fire pension board chairman David Keller reopened the door to an agreement in testimony before a state House committee on Monday, saying recent talks with Sen. Joan Huffman – the Houston Republican whose committee approved the reform proposal last week – had been productive and that he was “hopeful” his board could agree.

Keller acknowledged he verbally agreed to a compromise Turner offered that included more than the estimated $800 million in benefit reductions the board had approved last October but less than the nearly $1 billion in cuts currently reflected in the legislation.

After the final numbers were crunched, however, Keller said the proposal cut too deep.

Things had looked more positive for consensus earlier in the week, but these things happen. I feel like we have come along far enough that success is more likely than failure, but failure is always an option. The question I have at this point is if the Senate version of the bill makes it through, will the firefighters oppose the pension obligation bond issue, in hopes of scuttling the deal by whatever means they can? This is the part of requiring a vote that makes me nervous, precisely because it’s another opportunity for people who don’t like this plan for whatever the reason to kill it. But first we need a bill to pass in the House. Look for the arguments made by opponents there as a preview of what we may get in November.

Busy day in the Senate

They got stuff done, I’ll give them that. Whether it was stuff worth doing or not, I’ll leave to you.

1. Senate bill would let Houston voters weigh in on fix to pension crisis.

The Senate on Wednesday voted 21-10 to give preliminary approval of a bill that would require voters to sign off before cities issue pension obligation bonds, a kind of public debt that infuses retirement funds with lump-sum payments. Issuing $1 billion in those bonds is a linchpin of Houston officials’ proposal to decrease the city’s unfunded pension liabilities that are estimated to be at least $8 billion.

Houston Mayor Sylvester Turner told The Texas Tribune earlier this month that if the bill becomes law and voters reject the $1 billion bond proposition, a delicate and hard-fought plan to curb a growing pension crisis would be shrouded in uncertainty. He also argued that the debt already exists because the city will have to pay it at some point to make good on promises to pension members.

But lawmakers said voters should get to weigh in when cities take on such large amounts of bond debt.

“Of course the voters themselves should be the ultimate decider,” said state Sen. Paul Bettencourt, R-Houston, who authored the bill.

[…]

State Sen. Joan Huffman, R-Houston, said at a hearing on several pension bills last week that Houston voters would likely approve the pension bonds – and that she would publicly support the measure. Nonetheless, holding an election on the issue is worthwhile, she maintained.

“The voters want to have a say when the city takes on debt in this way,” she said.

See here and here for the background. The referendum that the Senate bill would require is not a sure thing as the House bill lacks such a provision. We’ll see which chamber prevails. As you know, I’m basically agnostic about this, but let’s please skip the fiction that the pension bonds – which the city has floated in the past with no vote – represents “taking on debt”. The city already owes this money. The bonds are merely a refinancing of existing debt. Vote if we must, but anyone who opposes this referendum is someone who wants to see the pension deal fail. Speaking of voting…

2. Senate OKs measure requiring public vote on Astrodome project.

In a move that could block Harris County’s plans to redevelop the Astrodome, the Texas Senate on Wednesday unanimously approved legislation that would require a public vote on using tax funds on the project.

Senate Bill 884 by Sen. John Whitmire, D-Houston, would require a public vote before Harris County can spend any taxpayer money to improve or redevelop the Astrodome. “Elections are supposed to matter … and this is an example of how a governing body is trying to ignore an election and go contrary to a popular vote,” Whitmire said.

[…]

The proposal has drawn opposition from Houston lawmakers who said that move violates the 2013 decision by voters.

Sens. Paul Bettencourt and Joan Huffman, both Houston Republicans, said voters should be given the opportunity to determine whether the new project goes forward because they earlier rejected spending tax money on the restoration.

“The taxpayers of Harris County would be on the hook for this project, and they should be allowed to have a say in whether they want to pay for it,” Huffman said.

Added Whitmire, “After the voters have said no, you don’t go back with your special interests and spend tax money on the Astrodome anyway.”

See here, here, and here for the background. You now where I stand on this. Commissioners Court has to take some of the blame for this bill’s existence, as the consequences of failure for that 2013 referendum were never specified, but this is still a dumb idea and an unprecedented requirement for a non-financed expenditure.

3. Fetal tissue disposal bill gets initial OK in Texas Senate.

Legislation that would require medical centers to bury or create the remains of aborted fetuses won initial approval in the Texas Senate Wednesday.

Because Senate Bill 258 by Sen. Don Huffines, R-Dallas, did not have enough votes to be finally approved, a follow-up vote will be needed before it goes to the House.

In the Republican-controlled Senate, where anti-abortion fervor runs strong, that step is all but assured.

[…]

After lengthy debate on Wednesday, the measure passed 22-9. Final passage in the Senate could come as soon as Thursday, after which it will go to the House for consideration.

It is one of several abortion-related measures that have passed the Senate this legislative session. Republican lawmakers supported Senate Bill 8 that would ban abortion providers from donating fetal tissue from abortions for medical research, and Senate Bill 415, which targets an abortion procedure known as “dilation and evacuation.”

Bills also have been filed by Democrats to reverse the 24-hour period a woman must wait to get an abortion and to cover contraceptives for Texans under age 18. The likelihood of those being approved in the GOP-controlled Legislature is considered almost nil.

I have no idea what that second paragraph means; all bills are voted on three times. Whatever. That sound you hear in the background are the lawyers for the Center for Reproductive Rights loosening up in the bullpen.

4. Texas Senate approves ban on government collecting union dues.

A controversial bill to prohibit state and local governments from deducting union dues from employees’ paychecks was tentatively approved Wednesday by the Texas Senate after a divisive, partisan debate.

The Republican author, Sen. Joan Huffman of Houston, denied the measure was anti-union or was designed to target a historical source of support for Democrats, even though she acknowledged that Republican primary voters overwhelmingly support the change.

Police, firefighter and emergency medics’ organizations are exempted from the ban, after those groups had threatened to kill the bill if they were covered the same as teacher groups, labor unions and other employee associations.

Groups not exempted will have to collect dues on their own, a move that some have said will be cumbersome and expensive. Those groups include organizations representing correctional officers, CPS workers and teachers, among others.

I’m going to hand this off to Ed Sills and his daily AFL-CIO newsletter:

Huffman, knowing she had the votes, repeatedly fell back on the argument that government should not be in the business of collecting dues for labor organizations. She never offered any justification for that view beyond ideology. Nor did she provide evidence of a problem with using the same voluntary, cost-free payroll deduction system that state and local employees may steer to insurance companies, advocacy organizations and charities.

Huffman tried to make the distinction between First Responders, who are exempt from the bill, and other state and local employees by saying police and firefighter unions are not known to “harass” employers in Texas. But she had no examples in which other unions of public employees had “harassed” employers.

“One person’s harassment is another person’s political activism,” Sen. Kirk Watson, D-Austin, said while questioning Huffman about the bill.

Watson noted the main proponents of the bill are business organizations that do not represent public employees.

Huffman was also grilled by Sens. José Menéndez, D-San Antonio, Sylvia Garcia, D-Houston, José Rodriguez, D-El Paso, John Whitmire, D-Houston, Royce West, D-Dallas, and Borris Miles, D-Houston. Sen. Eddie Lucio, D-Brownsville, offered several strong amendments, but they were voted down by the same margin that the bill passed. The senators relayed testimony from a variety of public employees who said SB 13 would be a significant hardship to them and they could not understand why the Legislature would pursue the bill.

At one point, Huffman declared, “This is a fight against unions.” But it was beyond that, even though the measure was first conceived by the rabidly anti-union National Right to Work Foundation and even though the Texas Public Policy Foundation published a report estimating a substantial decline in public union membership if the bill becomes law. It’s a fight against teachers, against correctional officers, against child abuse investigators and against most other stripes of public employees who only want what most working people would consider a routine employer service.

Particularly galling was Huffman’s general assertion that correctional officers, teachers and other dedicated public employees fall short in some way when it comes to meriting payroll deduction, which state and local governments basically provide with a few clicks of a keyboard.

Huffman was under certain misimpressions. In questioning by Whitmire, she repeatedly declared that it would be “easy” for unions to collect dues through some automatic process outside payroll deduction. Whitmire stated, however, that many state employees make little and do not have either checking accounts or credit cards. Huffman was skeptical that some union members essentially operate on a cash-in, cash-out basis.

Despite her assertion that it would be easy to collect dues from public employees outside payroll deduction, Huffman clearly recognized that when other states approved similar bills, union membership dropped.

To use an oft-spoken phrase, it’s a solution in search of a problem. And as with the other bills, further evidence that “busy” is not the same as “productive”. See here for 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.

City deficit not as big as feared

This is a nice surprise.

BagOfMoney

A huge budget deficit looming at City Hall – which has spurred talk of layoffs, service cuts, new fees and higher taxes – has been cut in half, relieving some pressure to scramble together a budget patch but doing little for Houston’s long-term financial health.

The unexpected boost of good news came from city Finance Director Kelly Dowe, who told a City Council committee Tuesday that what recently had been an estimated $144 million gap for the budget year that starts next summer has shrunk to about $63 million.

“That’s no small amount of change,” Dowe said, “but definitely a better picture than $144 million.”

The improvement is thanks mainly to a change in the police pension board’s funding formula that means Houston no longer must pay $50 million into the pension in each of the next two years on top of the $123 million and then $133 million, respectively, the city already is scheduled to pay. Savings in city operations and the city’s health care costs leveling off also helped narrow the budget gap.

Dowe still projects deficits in each of the next four fiscal years, driven largely by a spike in the cost of servicing city debt, rising payments into all three city pension funds and a cap voters imposed a decade ago that limits the property tax revenues Houston can collect to the combined rates of inflation and population increase. Though these coming budget gaps have narrowed, the numbers remain sobering, reaching a projected $112 million deficit in the fiscal year that starts July 1, 2017.

[…]

Rice University political scientist Mark Jones said narrower budget gaps lessen the problem’s urgency and make items like changes to the revenue cap, which would require a public vote, less plausible.

“The strongest case for lifting the revenue cap would be this cataclysmic effect if those revenues were not available for core city services like police and fire,” he said. “As that number gets lower and lower, a doomsday scenario is a much tougher sell.”

Other observers said the new numbers better enable Parker to argue she is pushing the ideas because they are sound policy, not as part of a scramble to close a budget gap.

Needless to say, I agree with that view. Repealing the cap is still the right thing to do. The immediate deficit may be smaller now, but it’s still substantial, and it gets bigger a couple of years out. We can use all available resources to deal with it, or we can be forced to cut taxes and make more cuts than we otherwise would have in years where revenues grew faster than expected. That should be good news in a scenario like this, but only if we repeal the cap first. Let’s not lose sight of that.

City exploring new pension for new firefighters?

Maybe.

Mayor Annise Parker

Mayor Annise Parker

Long concerned about the cost of Houston’s pensions and stymied in her attempts at reform, Mayor Annise Parker is considering a dramatic step to place new firefighters into a separate, less generous pension plan, sources with knowledge of the discussions said.

Officials acknowledge the existing Houston Firefighters Relief and Retirement Fund likely would sue the city over the idea, which has not yet been formally proposed.

[…]

Houston Firefighters Relief and Retirement Fund chairman Todd Clark said he had not heard of the idea. He was not receptive.

“We would have to look at it and see exactly what it is they’re talking about,” Clark said. “If that’s the case, the pension fund will defend the firefighters and the pension system. That will be a fight that we will definitely get into. We won’t support changing our system for the new hires.”

[…]

Councilman Stephen Costello said the idea of a separate pension fund for new hires arose after the city sued the firefighters pension system in January, claiming it was unconstitutional for Houston to be on the hook for payments over which it had no control.

Lawyers for the pension fund, sources said, argued the Legislature’s control was not absolute, and that the city could create a new pension system if it wished.

The city lost a ruling at the state district court level in that case and is appealing. Costello said the current idea appears designed to invite another lawsuit as a legal test.

“You never know until you ask, so I think that’s what the city is going to try to accomplish,” said Costello, who chairs the council’s budget committee and long has advocated pension reforms. “I think the city is testing the water in terms of the constitutionality of the state regulating our pension system.”

The benefit structure of the new pension plan under discussion, Costello and other sources said, would mirror the pension new police officers get, but without automatic cost-of-living adjustments. That benefit is the single most expensive portion of the city’s pension plans.

See here for the background on the city’s lawsuit. I got a press release from the HFRRF about the ruling in May but never saw a news story about it. There never was one as far as a Google search can find, but you can find the press release here. Not much to say about this since it’s basically vaporware, but I do agree with CM Ed Gonzalez in the story that if you’re going to reduce pension payouts to future firefighters, you’re going to have to pay them more up front, Beyond that, we’ll see what if anything happens.

City wins access to firefighter pension information

From the Inbox, late Friday afternoon.

Mayor Annise Parker today announced Judge William Burke of the 189th District Court of Harris County has mandated the Houston Firefighters’ Relief and Retirement Fund (HFRRF) Board to provide and disclose information requested by the independent actuary retained by the City of Houston. HFRRF has refused to provide data to allow the City to calculate the pension benefits that taxpayers will have to pay fire fighters covered by the HFFRRF over the next 30 years.

“As we expected, the judge has ruled this information must be given to the City of Houston,” said Mayor Parker. “It is routine information any other private employer would have and what the City needs to adequately budget for the future.”

Texas Government Code (Section 802.1012) places the responsibility on the City to retain an actuary to periodically audit the valuations, studies and reports of HFRRF’s own actuary and to provide the report of this independent actuary to the State Pension Review Board. The lawsuit, initially filed by the City in May earlier this year, was based on HFRRF’s failure to cooperate with the City and provide information necessary in the performance of the statutorily mandated actuarial audit.

The Court found that the Board has a legal duty to provide and disclose all information requested by the independent actuary retained by the City, that the City had requested this information from the Board and that the Board has failed to comply with this requirement and legal duty. The Court further found that the Board’s failure to comply has inhibited the independent actuary’s ability to accomplish its audit and that the City has been prejudiced by the Board’s lack of compliance.

See here for the background, and here for the case information from the District Clerk. I have not seen any reporting on this in the Chron as of yet, so this is all I know.