Mayor, pension boards on same page at hearing

Silvester Turner

Mayor Sylvester Turner and the leaders of the city’s three pension boards made clear to a visiting group of state lawmakers on Monday that they agree a fix to the city’s growing pension burden must be found, perhaps by the mayor’s deadline of year’s end.

The state House committee on pensions set up camp at City Hall Monday to hear testimony from the mayor, his rival in last fall’s mayoral contest, Bill King, city workers and various pension experts about the challenges presented by Houston’s retiree benefits.

The event brought little new information and few showdowns (save, perhaps, for one audience member shouting “time is up” when King’s comments slightly exceeded his allotted three minutes), but was notable for the relative cohesion of the key stakeholders’ talking points.

Houston owes its three pensions $5.6 billion, retiree costs are rising, and Houston faces broad layoffs and service cuts a year from now if reforms are not achieved, Turner said while repeating his call for reforms that bring down the city’s annual and long-term costs and for a reform deal before the Legislature meets in January.

The chairs of the municipal (Sherry Mose), police (Terry Bratton) and fire (Todd Clark) pension boards all stressed their commitments to continuing to work with Turner in the coming months.
Even Clark, who rarely missed an opportunity to accuse former mayor Annise Parker of “attacking firefighters,” struck a conciliatory tone.

“We will continue the dialogue going forward, and we do believe by the end of the year we will have an agreement,” Clark said. “We agree that the city should be healthy and we’re willing to do our part.”

Granted, the pensions’ leaders pushed back a bit. Municipal and police leaders stressed that the city must be forced to meet its obligations, since the city’s failure to make its full payments has helped create those plans’ poor funding levels.

Both also stressed that they already have sacrificed by cutting benefits for new hires, with Mose saying, “Reform plus time equals success.” Bratton, for his part, pointedly noted that firefighters have not been similarly accommodating. Clark declined comment on that.

Clark, for his part, noted that firefighter retirement costs amount to only a few percentage points of the $2.3 billion general fund budget.

In general, however, it was clear the pension boards planned, at least publicly, to embrace “change” at the hearing.

“We see this as an opportunity. We really don’t want to come back in 2019,” Bratton said. “Our members have worried too long about the most important benefit they have and it’s time to allow them peace of mind in knowing that their benefits are secure and the plan is sustainable.”

Turner, in his closely watched comments, sought to balance an emphasis on the urgency of reform with his commitment to his “friends,” the city’s three employee groups, all of whom supported his candidacy last fall. The eight rounds of applause he received during the morning from the employee-heavy crowd suggest he negotiated that tightrope well.

Annual cost of living adjustments, the level of employees’ contributions and worker retirement ages are all on the table, he said.

“They all three have worked with me and we are making progress and we are moving forward,” Turner told the committee. “Are we where we need to be? The answer is no. We’re not there yet. Are we moving in the right direction? We are. And no matter how slow it may be and no matter how painful it may be, the reality is, it is better for us to reach a solution here than to have to have you make the final call.”

Pension committee chair Rep. Dan Flynn, R-Canton, echoed those thoughts

“If the Texas Legislature ends up having to solve your problem, you may not like what we come up with,” Flynn said. “We feel like the solutions are right here.”

To that point, Turner joined the leaders of the three pension boards in saying he would not consider a switch to defined contribution plans — similar to a 401(k) — something he said he knows some committee members favor. Most public sector pensions are in the form of defined benefit plans, which replace a specified share of workers’ salaries based on their age and years of service, among other factors.

That issue was well discussed during last fall’s campaign, and King rehashed many of the points he made on the stump last fall when it was his turn to speak, saying he was convinced defined contribution plans are the only solution.

Defined benefit plans risk letting politicians give workers benefits that do not have to be fully funded right away, King said, which he said is partly why Houston taxpayers owe city pension plans more than $5 billion in debt that was never approved by voters.

“The mayor mentioned the amount they are contributing this year is $404 million — that’s 40 percent of all the property taxes the city of Houston will collect this year,” he said. “It is not a sustainable system.”

Daniel Box, a city Public Works employee and active union member, spoke of needing to be able to retire in dignity.

“City workers pay their part out of their paycheck every time it comes out. We don’t miss a payment. Unfortunately, the city, when they went to do their part, they put IOUs into the system,” Box said. “They’re trying to drive it back onto the city worker. Nobody ever mentions all the sacrifice the municipal workers have done. Out of all the pension systems, our people are going to be paid the least when they retire.”

Some of Turner’s comments, however, were aimed at the scores of employees watching, as he cast the need for reform as a way to ensure their benefits would not need to be slashed at a later date.

“I certainly hope that seven months from now that people who are applauding for me today,” he said, smiling, as he was again interrupted by applause, “I hope they will applaud for me seven months from now. It may not be as loud. I am not naive. What I will say to them is that what they do today in terms of making this system sound and securing their pensions, their retirement, for the future, will benefit their families and benefit themselves down the road.”

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