How Should Houston Control Runaway Pensions?
by: Pat Hernandez, December 11, 2012 5:12:00 pm
The city's annual commitment to the general fund pension bill is expected to grow by more than $100 million dollars over the next 4 years. Of the three pension plans, the city has the ability to negotiate with police and municipal employees through what's called meet and confer, which allows the discussion of benefits and the like, but not with firefighters.
Payments to the three pension funds account for about 9-percent of the city's general fund budget. Council Member Steven Costello chairs the committee on budget and fiscal affairs.
"We really do need to have the administration say, 'Okay, this is what we can afford to pay. And let's sit down and talk about it. Because if we exceed these payments, this is what's gonna happen to the other services that we're providing."
Costello was asked if he thought the pensions are sustainable under the current structure.
"Coming from a business perspective, when you're matching 26, 27, 35 percent of payroll, you can't afford to do that long term. So we have to figure out a way to where it's affordable long term."
Discussion included the management of other pension funds around the country and how what works in those cities might be used to ensure viability here.
A court appointed task force, that studied city finances last year, regarded runaway growth of pension liabilities as a major threat to the city's financial health. Todd Clark chairs the Houston Firefighter's Relief & Retirement Fund Board of Trustees. He thinks this discussion is designed to give the mayor more control over their pension.
"The pension is all we have, and she's trying to take away the hard earned benefits that the fire fighters have earned. I mean, it's just not right. And so, meet and confer process, there's no reason to have a formal law that says we have to sit down with the mayor. I mean we already do. She calls us; we meet with her. We've never declined to meet with her. But the point is, she's trying to take away these benefits that's been promised and provided by past administrations. It's like a contract I mean, a deal's a deal."
But Janice Evans with Mayor Parker's office thinks the city should be able to deal with fire fighters like it does with police and municipal employees.
"We want fairness in the process. We have two that we can currently negotiate and local control of. We don't have that same capability, and the belief is that we should have local control of our city pension systems, that are paid for by local taxpayers."
Evans says changes to police and municipal pension plans will impact their sustainability long term. Any changes to pensions can only be made by state lawmakers.