The pension problem

I don’t know enough about the particulars of the city’s pension problems to be able to sort out the competing claims made in this story. I do know that the current system is not sustainable, and that the fight to make changes in it will be long and nasty. I know some folks would like to see the Mayor charge in and just start making cuts, but these are basically contracts, and state law protects the beneficiaries while limiting what the Mayor can do. And I would not expect any significant change in that to come out of the next legislative session.

First, the state is facing a budget shortfall estimated by some at more than $20 billion, one that may consume all the attention of state lawmakers.

Second, Texas’ pension laws have been designed to ensure that municipalities will be able to keep the promises they have made to employees. They provide the systems with a modicum of independence and regulate how much cities and counties must give, putting them in a stronger financial position than many other government funds around the country, analysts say.

Third, the pensions will spend far more on lobbyists in Austin than the city. Texas Ethics Commission data shows the three pensions have plans to spend an estimated $400,000 to $800,000 on lobbying this legislative session.

The city, on the other hand, is expected to spend $200,000 to $350,000 on the entire range of issues it is seeking to address in the 2011 session.

“The mayor would hope, given the severe financial state that the state of Texas and the city of Houston are experiencing, that the Legislature would take up the issue of overly generous taxpayer-funded retirements, like they’ve done for other pension systems,” said Darrin Hall, director of the mayor’s office of Intergovernmental Relations.

And fourth, both the police and firefighters unions endorsed Rick Perry for re-election. Perry has absolutely no reason to give the city any help, so even if a bill does pass, don’t be surprised if it gets vetoed. Whatever we have to do about this, we’ll be on our own to do it.

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One Response to The pension problem

  1. John says:

    Now this is why I voted for Parker, clearly the benefits need to be cuts (and yes I know they are contracts). The only solution by the City is brinkmanship and threatening bankruptcy if they don’t agree to a reduction in benefits/changing the contracts. Or if there is some other method to allow the Unions to give in, Kuff every city in Texas and America has this problem and the legislatures are going to have to do something. If not get ready for massive cuts to services in order for us to meet the pension obligations, the math just does not work.

    I love all of the quotes from people who actually have done the math that none of these are sustainable, while the Union leader said

    “”The urgency the city has is all politically driven,” Gonzales said. “We should wait, be patient about this and look at things in the next couple years.”

    love to see his excel model showing how the pensions will not go bust and they are in fine shape. Kudos to Parker, but I don’t think there is enough time in the session to do anything on this issue. The city needs to start tough negotiations with the Unions or else start cutting a lot of city services in order to meet our obligations to the 3 groups

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