| April 5
April 5 Legislation addressing public pension
problems in the two biggest cities in Texas are on track for a
House vote this month, a key state lawmaker said on Wednesday.
A bill for Houston's retirement system passed the Texas
House Pensions Committee on Wednesday and State Representative
Dan Flynn, the committee's Republican chairman, said a Dallas
measure should follow suit by next week.
"I believe both bills will make it to the House floor in the
next couple of weeks," he said in an interview, noting the
legislation is the culmination of 18 months of work to find
fixes for the financially ailing pension systems.
With the Dallas police and fire pension system projected to
become insolvent within 10 years, legislation would cut the
nearly $3.7 billion unfunded liability to $2.18 billion and
boost the funded ratio to nearly 50 percent from the current
36.8 percent, according to a bill analysis. To accomplish that,
the measure would increase retirement ages, hike worker and city
contributions, limit cost-of-living (COLA) increases for
retirees, and restructure governance.
During a hearing on the bill this week, Dallas Mayor Mike
Rawlings pushed for city control of the pension board and
against "a taxpayer bailout."
Flynn dismissed the mayor's opposition.
"There's probably a little heartburn for everybody, which
makes it a pretty good bill because if only one side was happy
we'd still have problems," he said.
The Houston bill, supported by Mayor Sylvester Turner, would
reduce the unfunded liability in the city's municipal, police,
and firefighter funds to about $5.5 billion from $8.1 billion by
boosting retirement ages, suspending and reducing COLAs, and
increasing employee contributions. For its part, Houston would
have to make actuarially required annual payments to the funds,
which would lower their projected investment return rates to 7
percent, and sell $1 billion of pension bonds.
Potentially complicating matters for Houston is another
bill, which passed the Senate last week, requiring voter
approval for the issuance of pension bonds by local governments.
"We do not believe in taking a tool away from municipalities
solving pension problems, especially in a higher interest cost
environment," said Darian Ward, the mayor's spokeswoman.
Flynn said his committee became involved because pension
problems contributed to credit rating downgrades for both
"If the two largest cities in Texas start getting
downgraded, well, it could actually affect our Texas bond
ratings," he said, referring to the state's triple-A credit
(Reporting by Karen Pierog in Chicago; Editing by Matthew