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.
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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.
I’m no lawyer either but the question that came up by several well placed individuals is why didn’t they also sue the Governor and legislature who passed the measure? The city ordinance passed last year has no practical effect without the state law and Houston opted out of constitutional protections for city pensions back in 2004. Maybe our resident traffic court guru or former parking hearing magistrate can chime in with better legal reasoning but given the HFRRF people are now admitting they have to lower their investment rate to almost exactly what the law was set at, in stark contrast to what they claimed this entire legislative session, I’d say they best adjust their expectations a little bit moving forward.