Proposed Budget Amendments

June 13, 2012

Today’s city council meeting was packed with discussions about many different issues including amendments to the budget.  One that just cannot be overlooked is Council Member Helena Brown’s amendment for the city to stop paying into the pension systems.  Her solution to the pension problem is to just stop paying.  CM Brown’s amendment will “bring to question the state constitutionality of forcing a municipality into bankruptcy by obliging them to maintain an unsustainable pension plan” (see here).

CM Brown has a history of taking the easy way out, and this is no different.  A council member’s job is to critically consider every ordinance.  If a member already knows that he or she is voting “no” no matter what, that council member doesn’t have to take the time to fully consider anything.  There is a difference between making tough decisions and making no decision.  Also, rather than doing the hard work required to fix the pension situation, she is now saying that we should just stop funding it instead.  Unlike many other projects in the city, this is not one that can just be defunded.  City workers entered into a contract with the city, and the city has to hold up their end of the agreement.  Can you imagine what would happen if they don’t (the red light camera contract comes to mind)?  It is because of these types of situations that people have so little trust in our government.  Surely changes must be made with the pension system.  One idea might be to stop pensions for new employees, but pensions should still be paid to any current or former employee who presently qualifies for the pension and who we are contractually obligated to pay.  While I can appreciate her sentiment that the current pension program is expensive, her proposal just acts as a roadblock and makes real proposals more difficult to introduce.   Why propose ideas that have no chance of being implemented?

Other budget amendment Highlights:

Council Member Jack Christie – Proposed an amendment to require certain departments to fill all job vacancies with three months or forfeit the position.  Interesting idea, but I think CM Christie needs to look into this one a little further.  Departments such as Police and Fire might have vacancies because they are waiting to hire the best officers and firefighters for the jobs.  So this might be useful in some departments, but I think he should not extend this amendment to agencies across the board.

Council Member Ellen Cohen – Proposed a $5/person fee on adult entertainment establishments.  This is expected to generate about $3 million per year, and the money would go to help with the backlog of untested rape kits.  You may remember that when CM Cohen was a state house representative, she passed a similar tax on the state level (House Bill 1751 in the 80th Session) and received bipartisan but not unanimous support.  We will see how this pans out on the city level.

Council Member Andrew Burks – Proposed a ballot measure to change term limits from the current two-year term (up to three terms) to a four-year term (up to two terms).  So while this wouldn’t change the number of years members are in office, the change would allow members to serve longer terms and not have to campaign every other year.  This has been introduced in the past, but members failed to put it on the ballot.  While Mayor Parker supports this, it is not an issue she has pushed for.

Council Member Melissa Noriega – Proposed for an evaluation of cost savings to provide electronic documents for council meetings.  If it’s cost effective, I don’t see why they shouldn’t make this change.

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Looming Pension Problems in Houston

January 12, 2012

Although some Houstonians were relieved after the last budget cycle that the city seemed to bounce back, it looks like the new budget shortfall will be worse than ever – perhaps $47 million (although with increasing sales taxes and property tax revenue, it might be slightly less).

Mayor Annise Parker has done about as much as she can do when it comes to making cuts across the board.  It is now time to dig deeper and find real places to cut and evaluate every penny in each department.  Doing so will surely find many areas to cut, do away with, and maybe even places where money has been lacking.  We just don’t know until we do a thorough analysis.

With that being said, there are problems looming around the corner that need to be addressed.  Public safety accounts for roughly 60% of the budget.  That probably will never be cut, and I’m not advocating for that.  Public safety, in my opinion, should be the number one priority of the city government.  So with the exception of probably much needed reevaluation and reallocation of the public safety budget, it’s not going anywhere and for a good reason.  

This leads to the next problem.  If public safety accounts for 60% of the budget, that means that we only have 40% of the budget to do EVERYTHING else.  This includes the huge, looming fiasco called the city pension.  Houston’s pension is broken up into three areas: Police, Fire, and all other municipal employees.  Year after year, the city does not put as much money into the pensions as they are supposed to because they don’t have the money.  If this is the case, clearly some changes need to be made to the system as a whole.

Politicians don’t usually like touching the pensions because it is such a heated topic among just about everyone, and both political parties have strong opinions and even differ within the party on how to solve the problem.  Right now the pension issue is just an agitation that manages to get stifled each budget cycle.  Until it becomes a real dilemma, getting anyone to try to solve the problem will be difficult to say the least.

Parker has attempted to start looking into it and making changes, but she still has a very long way to go.  State law mandates defined-benefit plans as well as many other requirements.  Although the city usually has autonomy on many cases, this is one where Parker is going to have to work with the state to have more leeway because this system will become unsupportable very quickly.

One solution that needs serious consideration is completely changing the system for all NEW employees.  To be very clear, anyone who is a current employee or retiree should get exactly what they were promised.  To guarantee something and then take it away is unquestionably dishonest.  While there are surely changes that can be made to the current plan, anything promised needs to remain.  However, anyone new coming in to the system needs a completely different plan that is comparable to the private sector.  Otherwise we are just being dishonest with the next generation.  We can’t continue to make promises we know we can’t keep.