Houston's Pension Woes Dominate Lege Hearing

Houston City Council now qualifies as a place so dysfunctional that even a Texas House committee can get a laugh out of it.

Ray Hunt, speaking on behalf of the Houston Police Officers Union, was a high level of frustrated as he strode to the podium in the House Pensions Committee at the Legislature last night, lambasting city leaders and claiming they've pulled police officers and city workers into their fight with the Houston Professional Fire Fighters Association.

Mayor Annise Parker wants to stanch the hemorrhage that is the mounting liability of the firefighters pension plan, now up to $1.8 billion. But Hunt argued it was hard to trust the decisions of a Council that he claims is incapable of controlling its own spending.

When Houston declared a $13 million surplus at the end of its last budget, Houston City Council could have taken that money to pay down debt. Instead, the money was divvied up 13 ways so each Council member had $1 million in additional discretionary spending. Hunt was flummoxed by the decision.

"The mayor said it was like teenagers at a mall," said Hunt, drawing a large laugh from the crowd. "And we want these people to be deciding my pension for the rest of my life? My pension?"

As late as three weeks ago, those backing a campaign to pass Rep. Jim Murphy's, R-Houston, pension reform bill, House Bill 2608, were unaware Houston voters had already opted out of state protections of local pension funds back in 2003. Part of the argument at the time was that the police officers pension was well managed, with a board of seven members who made balanced and thoughtful decisions.

Murphy's bill would give control of 100 municipal and fire pension funds across the state back to local government, with management by municipal ordinance, rather than leaving much of the structure intact in state statute. Beyond that, it also will give cities the option of striking pensions altogether, shifting to a defined contribution plan with undefined outcomes rather than guaranteed fixed income.

When testimony closed at last night's hearing, Murphy assured those who testified that the pension protection issue in Houston was addressed in his committee substitute. Whether that message will be carried to all possible detractors in time to keep the bill on the track for passage is anyone's guess.

Sen. Paul Bettencourt, R-Houston, is carrying the companion bill to Murphy's legislation in the Senate. Bettencourt said he saw the growing liability on the firefighter pension fund to be a significant drag on Houston's potential growth.

One challenge to this idea of tossing out pension plans, however, will be that some employees, like Hunt and his colleagues at the police and fire departments, have already deferred Social Security payments in favor of a pension plan. Any changes made to the retirement plan of active employees will be a change to the only income that Hunt, and others, will expect in retirement.

Parker and firefighters are currently circling a temporary truce in pension contributions, which now constitute a third of the firefighters' payroll. Bill Frazer, who's currently running for City Controller, also addressed the committee and noted the city has been stumbling on full payments on pension obligations for almost a decade.

Hunt's frustration was palpable, as were the concerns of his colleagues. While the committee hearing on Murphy's bill was only two hours, another 110 people had signed up to oppose the measure who did not speak.

Murphy's bill, his third attempt to come up with some kind of pension solution for Houston's pension woes, was left pending in committee.

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Kimberly Reeves
Contact: Kimberly Reeves