Tuesday, 23 August 2016 20:21

City pensions: What’s the next move?

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Mayor Turner says pension agreement must be met by the end of this year.

 

A message from Mayor Sylvester Turner:

One of the pleasures of my job is the opportunity to meet the hardworking employees of the City of Houston. During the spring, many of you asked whether we would need layoffs to balance the city's budget. I'm proud that City Council acted quickly and unanimously to adopt my administration's balanced FY17 budget, which improved our financial standing and protected your jobs. While many speculated that hundreds of employees would be laid off, that did not happen. I promised you and the people of Houston a budget that preserved service quality and valued city employees, and that's what we delivered through shared sacrifice. 

With that success behind us, I now hear another question frequently: "What's happening with our pensions?" You deserve good and timely answers to that question, just like you deserve a pension you can count on. So I am writing to update you on our work to resolve the city's financial challenges and provide you a secure pension on which you and your family can depend.

My administration is working closely with your police, fire and municipal employee pension leadership to make sure that happens. We will meet regularly through the remainder of this month, multiple times a week, as often and as long as it takes to find a solution. While I do not intend to negotiate this important matter publicly, I do want to assure you that I am encouraged by the positive steps forward we are beginning to make together. And I will continue with these updates so you are aware of our progress. 

As I told members of the Texas Legislature in June, the city's fiscal circumstances are challenging. Population growth increases service demand, while cost increases, property tax revenue limitations, a broken appraisal system and the economic downturn make it harder to meet service needs. Meanwhile, the city's pension liability is more than $5 billion - and growing.

Even Wall Street is noticing: agencies that rate the city's credit have expressed concern about our mounting pension debt and the absence of a long-term strategy to address it. Working together, we can fix this. I am committed to protecting Houston's economic future by reducing the city's long-term pension obligations, and I am equally committed to ensuring a secure, dependable pension for each of you.

First, I want to remind all of you that my position is the same: I will not consider proposals that eliminate the city's current defined-benefit structure. All three pension systems oppose a move away from defined-benefit plans, and so do I. This position must come with tradeoffs, and we are compelled to look at options including cost-of-living adjustments, contributions, and retirement age, but we will not meet our goals by undermining your financial future. 

Along with protecting your defined-benefit plans, I have three additional objectives in working with your pension representatives:

  1. We must reduce the city's unfunded pension liability now and in the future; 
  2. The annual cost the city is obligated to pay must go down now and in the future, and 
  3. We must have an agreement by the end of this year for the Legislature to enact in 2017.

My goal is a long-term pension solution worthy of support not just from City Council and the pension boards, but from each of you, and from our business and community leaders as well. And we do not have a choice. Without a deal on pensions, we face massive layoffs, service reductions, and a retirement system with a questionable future.

We must fix this. City employees and Houston taxpayers deserve a secure, dependable retirement system. In the spirit of shared sacrifice, we will create a solution that is fair to all concerned: our retirees, our present and future employees, and all the people of Houston.

When there were a lot of questions about how we would balance the city's budget while facing a $160 million shortfall, I told you that shared sacrifice would benefit us all. If we work together to reach a resolution that takes this issue off the table now and through our lifetime, the benefits will flow to active employees, retirees and the city as a whole. And each of you will receive what you deserve as hardworking City of Houston employees: a pension you can count on.

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