That’s once you factor in interest payments over the life of the bonds that will be issued to cover this.
Mayor John Whitmire
Houston Mayor John Whitmire’s proposed settlement with the firefighters union could cost significantly more than previously advertised, City Controller Chris Hollins said Tuesday.
The total cost of a back-pay settlement with the city’s firefighters could be $1.1 billion to $1.3 billion after taking into account interest and fees, Hollins said.
In addition, the total extra cost of a forward-looking, five-year contract with the firefighters’ union could exceed $140 million, according to the controller.
Hollins declined to weigh in on whether he thinks the settlement is fair, but his take on the settlement cost underscores the heavy hit to taxpayers from the deal that Whitmire struck earlier this month.
[…]
Hollins said his assessment of whether the deal is sound will hinge on a comparison of Houston firefighter pay to counterparts in other cities in Texas. He still is waiting on that analysis from the Whitmire administration, he said.
Whitmire has yet to release a detailed plan of how to pay for the firefighter settlement. Administration officials have broached the idea of instituting a garbage collection fee or creating an exception to the city’s property tax revenue cap to pay for the Houston police and fire departments, which make up the lion’s share of the city’s operating expenses.
Both of those ideas are worth exploring, Hollins said at his Tuesday news conference. He said the city cannot meet its mounting obligations through cost-cutting measures alone.
Adding the firefighter settlement to the city’s structural deficit, Houston soon will be on the hook for an extra $230 to $280 million dollars in expenses per year, Hollins said.
See here for the previous entry in this series. Mayor Whitmire still hasn’t provided a plan, and while it’s reasonable to give a topline figure for the total cost, there really will be a lot paid out in interest over the years. A million bucks twenty years from now is worth less than a million bucks today, but it still has to be paid. I don’t have a problem with that, but the line that this settlement was needed because the cost of losing to the firefighters in court would have been a lot more is at least a little disingenuous, in that the city could have prevailed in that lawsuit. I don’t know enough to know what the chances are of that or what a decent risk analysis would look like, the point is that the firefighters didn’t agree to a settlement out of a sense of civic duty, they did so because their risk analysis suggested the city made a worthwhile offer to them, taking into account the possibility they could lose or just not get as much if they won. It’s all a calculation.
It’s fair to say the city was going to have to pay something when the court case was done, and whatever you thought of the merits of the case there’s value in knowing what that amount is so a plan could be made for it. It’s just that, you know, now we have to make those plans. And they have to be made in the context of a budget outlook that is now worse because of it.
Houston Controller Chris Hollins has projected a budget shortfall of $230 to $280 million for the upcoming fiscal year, warning that the city’s savings cannot sustain the extra costs from the latest firefighters’ deal beyond another year.
[…]
Combining debt repayments, interest and planned salary hikes, the city’s budget is bracing for an additional cost of $70 to $80 million in the next fiscal year that starts in July. This is on top of an already projected deficit of $160 to $200 million that does not account for the impact of the firefighters’ agreement, Hollins said.
“This is a long-standing pattern that the city for years and years has been spending on a recurring basis more than is brought in,” Hollins said during a Tuesday press conference. “You start to look at the numbers and they pile up, and it’s my job to at some point say, ‘hey, we can no longer foot this bill.’”
Whitmire’s team has proposed potentially adjusting the city’s property tax revenue cap, charging a garbage fee and implementing 5% budget cuts across most city departments as potential ways to cut down expenses and generate new revenues.
Hollins said he has long advocated for removing the revenue cap and is open to exploring the addition of a garbage fee, noting Houston is the only major city in Texas without one. He said, however, that he does not support large-scale budget cuts or layoffs that would undermine essential city services such as water provision, trash collection and road safety projects.
“These are fundamental necessities that residents expect, depend on and pay for with their tax dollars,” he said. “We were elected with a mandate to not only maintain but to improve the quality of critical city services…and we must uphold that responsibility.”
I too have long advocated for getting rid of the stupid revenue cap, and I look forward to Mayor Whitmire making that case. It’s just too bad this has to wait until 2026, because we could use it now. Or, really, anytime in the past. But here we are.
I wonder how many firefighters will become millionaires with the new deal with Whitmire. I have heard that many, if not most, will retire as millionaires by age 60.
“that the city could have prevailed in that lawsuit.” This sentiment is exactly what got the City of Houston to this point. Where else was the lawsuits to go? Turner was challenging mandatory arbitration, and I’m sure that would’ve gone to the Supreme Court again, but that would’ve been 2-4 years down the road. What Supreme Court is going to rule mandatory arbitration unconstitutional? If they did, Texas already ruled that a judge’s oversight WAS constitutional. Where is the city supposed to win? Everyone would have won in 2016 if Turner was willing to negotiate, but he wasn’t, and “the city could’ve prevailed in court” plan is what led to what you have now, so if you supported Turner in his efforts before, support the results Houston is faced with now. AND…….
Remember the pension reform everyone was do happy about? This is another result of that. If you support the pension reform, better support this. AND……
When people tell you about the problems going on in the fire department, maybe, just maybe, you could believe a little bit, doesn’t have to be all of it, but just a little about what they have to say.
Kuff, I believe what you stated at the end of this article:
https://www.offthekuff.com/wp/?p=109453
Turner wisely (for his benefit) pushed this onto another mayor, he was able to drag this out until the end of his last term.
It is not cheap to have a professional fire department, which mounts an interior attack on structure fires, at personal risk and the need to have skilled and trained firefighters. Add to that having to fight fires in a city with high rises and sky scrapers, add in all of the construction sites, and the traffic mayhem, it is quite a job, and, of course the firefighters spend a lot of time sitting around their stations, but they are there, away from home, and ready to respond. It’s not gonna be cheap if you want to have that protection for your city.
Can I come work at your FD. I have been a ff for HFD and I can assure you no one is getting a million dollar. Not all of use retire at 60, but considering must of us will die of cancer or work related illness or injuries with in 15 years.
Many believe firefighters are just sitting around the station watching movies. Nearly 80-85% of 911 calls are EMS related, the fire dept averages roughly 1100 calls for service a day. Along with being firefighters they are all either an EMT-Basic or EMT-Paramedic. Also tasked by the fire dept is HazMat, Rescue, and other specialized skills.
It has been over 10 years since they have had any type of raise from the City, the raise received recently was from COVID federal money used by the City.
I believe how this deal is done needs to be financially responsible, but for years the last Mayor and City Council did not take care of this and continued to fight this in courts and paying City attorneys salaries of 300K all the while.
And who told you that? Millionaires? Please tell me how cause I’m gonna join the fire department
Millionaire, the drop program. Yes, many, if not most, will be millionaires when they retire.
From the Houston Chronicle
“An employee joins the city at age 22 and opts for the pension plan in which she contributes 4 percent of her paycheck. When she hits age 46, she qualifies for the deferred retirement plan, because her age, 46, plus years of service 24, equals 70.
Assume she is earning $40,000 when she is 46, and that figure is used to calculate her deferred plan, which immediately begins depositing a monthly retirement check into a special account that she can’t touch until she really retires. She continues to work until age 65.
In the year she turns 46, her pension benefit is $32,365. Each subsequent year, that benefit is given a cost-of-living boost of $1,295 — 4 percent of her original benefit. Thus in the year she turns 65, a total of $55,668 will be deposited in her deferred-retirement account. The total amount accrued in that account over that 19 years would be $836,322.
But that doesn’t include interest earned over that time, which is guaranteed by the plan never to be less than 8.5 percent annually, and more if the general pension fund earns more. Actuarial Service Co. estimates the average return will be 11.1 percent. The employee also keeps contributing 4 percent of her salary into the account. That money earns the same interest.
Actuarial Service Co. assumes the employee gets a 4.5 percent raise each year, which increases her 4 percent contribution from $1,672 when she’s 46 to $3,693 when she’s 64.
That would give her a pot of $2,744,964 waiting at age 65. But of course, given recent experience, she won’t get those raises. Even if she never got a raise above $40,000, however, a recalculation would likely put her pot in the $2 million range, since the employee contribution is so minor.
The employee can get the money paid out over a 15-year period. And she would also begin drawing her regular pension, recalculated based on her salary at age 65, until both she and her spouse die.”
New Employees have new rules so it may not be as much for them.
I would not be surprised that many of you who posted are firefighters, but if you are not, ask the mayor to tell the citizens of Houston how many fighters can retire as millionaires today.
I just got off the phone with the mayor and he said, Turner, you made a huge mess to clean up..
Please, Manny, i say this with respect, and please trust me when everything you’ve posted about retirement and benefits is completely wrong. I don’t know where you got your information, but it is not correct. The Houston Fire Fighter Retirement and Relief fund could hopefully have some correct information for you:
https://www.hfrrf.org/
1. My preferred nickname is Meme, a common nickname for Manuel in South Texas. I am from Corpus Christi, and my parents are from a small community near Roma, Texas. A former city council member, Rob Todd, was the first to start calling me Manny.
2. The information came from an article in the Houston Chronicle from 2004.
3. Bob Lanier was the first to implement the Drop program, but Lee Brown made it great for employees.
4. I know that the pension has been tweaked since then. For instance, Bill White added five years. So, employees who started more recently will not have as great a plan.
5. I had looked at the link you posted before, it does not have the information as to how much or how many employees will have an excess of a million dollars on retirement.
6. As to the person who wrote we will soon die after retiring; your spouse keeps getting the pension, so she or he better be nice.
7. David, I may not have written or would have written anything as I believe firefighters are heroes, but the “darling” started getting annoying.
Meme
I was hired in 2009, and no one had a deal approaching what you are describing.
You’re either deliberately dishonest or so misinformed you should write down your thoughts, send them to a competent & trusted friend, and see if they think the dementia is advancing.
2004 is 20 years ago, so, respectfully, everything you are posting, and other people are reading, is incorrect.
Look at Texas statue Article 6243e.2(1) this is the statue that governs the retirement program available to everyone who wants to qualify to be a Houston Firefighter.
If it is too much to read, then please realize the information you are using is not correct.
So the people who are grandfathered in, did not.
If I am wrong it will come out
There’s no secret, it’s public knowledge, and state law, which is available to everyone, but if a person doesn’t put in the research to get the correct information before forming an opinion, it doesn’t help anyone.
Jack, people read what they want. I stated that new employees may not have as great a deal. You haven’t each reached the point where you can join Drop or retire.
I am sure that all the fine details will come in time, but what I wrote is accurate for those who have been with the Department since the mid-1990s.
So, how many millionaires will be retiring?
Only you know Manny
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