Houston's Pension Scandal - Part 3
The Comical weighs in on the city's pension scandal on the editorial page today.
It's not surprising that the city of Houston's pension fund shortfall may be as much as $1.5 billion over the next 18 years -- a shortfall that will hit Houston taxpayers with higher taxes, fewer services or both. It's not surprising because nobody has been minding the store at City Hall for the past six years.I don't blame the pension boards, because they acted as a very effective advocate for their constituents -- that's their job. I don't blame the Legislature for not tending to the specific business of the city of Houston -- that's not their job. I do blame Mayor Pothole, mostly, and City Council to a lesser extent (incidentally, why has our City Controller, who was a member of Council when this plan was approved and whose liberal supporters never fail to tout her financial acumen, been so quiet about all of this?).During his administration, Mayor Lee Brown approved increases to city pensions that were generous to a fault. Houston is now obligated to pay its retired employees far more than cities of similar size pay theirs, Chronicle reporters Dan Feldstein and Kristen Mack wrote in the Sunday Chronicle.
The city cannot afford these expanded benefits, which will pay 25-year veterans and their surviving spouses almost 90 percent of their final salary.
Blame the pension boards, made up of city employees and retirees, which employed a consulting firm that underestimated the money the funds will need to meet their obligations.
Blame Mayor Brown, who approved the increases and ignored a state warning that the cost would be unaffordable. Blame City Council, whose indifferent members failed to raise the alarm.
Blame an uncaring majority of the Legislature, which approved the increases despite warnings by state Rep. Martha Wong and a few others.
All of the officials listed above either didn't care about the huge cost of the new pension plans to Houston taxpayers, or they were too timid to object for fear of the employee groups' political wrath. Many of them probably were not sophisticated enough to understand the plans' provisions and figures.
Voters also share in the blame for approving Proposition 15 last fall, a constitutional amendment that forbids Houston and other cities from reducing pension benefits to current employees.
And you know who else I blame, in addition to the Dems who voted for Lee Pothole Brown three times? The Comical editorial board, which endorsed the fool over and over and over.
Incidentally, the Comical newsroom is a little culpable as well. As "Houston's Leading Information Source," surely the newspaper realizes that the $1.5 billion shortfall -- which seemingly ballooned from $1 billion in just a few days -- is now an obsolete number as well. According to KHOU-11, a new report is projecting a shortfall of $1.8 billion by 2009. One wishes our local newspaper would do a little less cheerleading, and a little more reporting.
Furthermore, the Comical (along with everyone I've read so far on this topic -- including myself, until someone pointed me in the right direction) has been curiously silent on one potential solution to this problem that is mentioned in the constitutional amendment it blames voters for passing. Check out this provision in that amendment:
A retirement system described by Subsection (a) and the political subdivision or subdivisions that finance benefits under the retirement system are exempt from the application of this section if:(1) the political subdivision or subdivisions hold an election on the date in May 2004 that political subdivisions may use for the election of their officers;
(2) the majority of the voters of a political
subdivision voting at the election favor exempting the political subdivision and the retirement system from the application of this section; and(3) the exemption is the only issue relating to the funding and benefits of the retirement system that is presented to the voters at the election.
I don't know if it's too late to schedule such an election or not, but apparently the City of Houston is not completely hamstrung when it comes to existing liability. Time is pressing, however. The City would have to win a May 2004 vote of the citizens to exempt itself from the requirements of Proposition 15 (and then actually come up with a plan to scale back benefits), and such a vote could be politically divisive not to mention a killer of morale among city employees. Still, the option ought at least to be on the table, even if it hasn't registered yet with our dreadful local newspaper. One suspects, given Mayor White's legal and financial background, that this is an option he's considering, although it's one unattractive option among many of them unfortunately.
The Comical, in its otherwise underwhelming coverage of the city council meeting yesterday, does report that the fiscal affairs committee will be taking up the issue on Friday. Stay tuned.
Posted by Kevin Whited @ 03/04/04 08:38 | Houston | Technorati
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