Houston Mayor Wants To Approve Multi-Million Pension Bond Deal

The mayor of Houston is wanting to get get voters to approve an almost $500 million dollars worth of improvement bonds during the month of November. This will include an amount around $115 million for new vehicles, $2 million for the cost of bike trail planning, $7 million in wages and salaries for workers and around $350,000 to replace the lighting and televisions around City Hall. He is also urging for millions more with the bond to get repairs done in the city buildings.

Recently, a mailer was sent to ask if voters would help promote the bond. The mayor had given his full support for these proposed funds. He feels that this money will be a responsible way for the city to pay for things like upgrades to fire stations, police departments, libraries and parks. None of these funding propositions will require there to be an increase in taxes. The mayor had also noted during a statement that all of Houston's municipal workers, police officers and the former mayor all show their full support for these bonds. The decision to approve these bonds will be decided by the voters on November 7th and with early voting already completed before that.

City Hall had also stated that some of the bond funds would not be going to helping the damage caused by Hurricane Harvey because the deadline to put it on the ballot had already passed once the hurricane had come through. However, many of Houston's city leaders are looking at the huge amount of projects on the list to be used by the funds and think that some of the city's priorities are a bit misplaced. They fear that a lot of the money used will be wasted on things that are not a top priority.

Experts Weigh In On The Mayor's Proposal

Many experts came together in order to weigh in on their perspective of the mayor's new proposal. They had a panel discussion to weigh the pros and cons of it and came to the conclusion that it may actually work to improve the overall sustainability of the pensions. Many of the measures in the proposal can help significantly reduce costs. However, without a buy-in from all of the three pension boards, there will be many challenges to face down the road. Most notably, the firefighters in the city are not on board with this proposal, while there has been no objections from the municipal workers or the city police. All three pension funds are already underfunded in some areas. The funding took a downturn since 2000 because of the lower-than-expected returns on investments and lack of sufficient funding form the city.

Proposed Budget Cuts

The proposal from the mayor will include some budget cuts for retiree benefits as well as a new 30-year time frame to get the unfunded liability paid off. Today, that liability is well over $7 billion dollars, according to estimates from the mayor's office. The city would also need to start paying a full contribution each year. They have not done so in the last decade to all three of the pension funds. This may trigger more negotiations being made between the pension boards and the city in the near future.

The main roadblock currently is the lack of commitment from the firefighter's pension board. This may prove to put a stop to the whole plan if they don't decide to agree to the proposal. Other members of the panel were very excited for the plan but wanted to get more details about it. Some had expressed concerns about the "corridor mechanism" which could possibly trigger more negotiations needing to be made about the contributions reaching their limits. Many on the panel would have loved to see the mayor set aside a little more funding for savings that could be used for the many uncertainties within the proposal.

Notable Uncertainties

There were many notable items which where not included in the reform proposal set out by the mayor. This includes the lack of a switch from a defined benefit system to a defined contribution plan. Many other cities have already made this change and many feel it is needed in order to put a stop to increased costs and attract more young workers who are looking for more flexibility within their careers when they are first starting out. In essence, the defined contribution plans are typically more portable compared to the defined benefits plans.

No Mention Of Taxes

The question regarding property taxes was also not explicitly addressed in the mayor's proposal, either. However, the mayor did make a mention of repealing the property tax cap during the same time of his pension reform speech. He feels it is necessary to fix the pension issues before even beginning to talk about changing the property tax rules. To the taxpayers, there are more pressing issues than the pension reform. They are worried about the ability of the mayor to improve services for the cities residents without having to see higher taxes. Voters do care about things such as keeping their streets and parks maintained without having to pay out of pocket themselves.