Instability in its three pension systems is the greatest threat to Houston's financial solvency, city officials and financial analysts say.The firefighters don't want "watered-down collective bargaining". Well, I don't want collective bargaining at all. Collective bargaining is one of the problems.
Within three years, according to an actuarial study commissioned by the city, the pension for firefighters will require the city to contribute 45 percent of its payroll costs for that retirement plan, a burden Mayor Annise Parker says is unsustainable.
The other two plans are in even worse shape. The police and municipal employee pensions are underfunded by $2.1 billion, roughly the equivalent of what the city spends annually for public safety and general operations.
"The bottom line is the whole system is completely unsustainable with current benefit levels and the city's financial position," said John Diamond, a Rice University public finance fellow and governmental tax consultant.
The opening salvo in what may be a long fight over city pensions is expected to take place in the upcoming state legislative session. The city is taking direct aim at the firefighters' pension, seeking help from state lawmakers to force pension officials to negotiate in hopes they can reduce benefits and lower annual contributions.
"Voters elected me to make tough choices, and voters elected me to get the city's budget in order," Parker said. "We are hemorrhaging right now … in some of our pension costs. … There's a difference between a fair pension and a gold-plated pension, and the citizens of Houston have to know that we can find a fair balance in there."
Christopher Gonzales, executive director of the firefighter pension, said the fund does not want to join the city in a "meet and confer" agreement, a sort of watered-down collective bargaining. Those negotiations with the two other employee pensions in recent years have only resulted in reduced benefits for the workers and annual contributions to the system that were not enough to ensure its financial security, he said.
The mayor ought to grant Gonzales his watered-down wish and outsource police and fire to the lowest bidder. Then again, the City of Houston is Bankrupt (So are California, Oregon, and Pension Plans in General) so arguably the best thing for Houston to do is admit it and file for bankruptcy. The police and fire departments can then see what benefits they get in bankruptcy court.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
C
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