The Houston Chronicle article on 7/6/2015 (“Houston’s debt outlook downgrade a warning, analyst says”) stated, “more than 95 percent of the $130 million general fund spending increase in Parker’s budget this year is swallowed by contractual payments, namely pension obligations.”
We were surprised by this statement because the increase in pension expenditures attributable to the General Fund for the Houston Municipal Employees Pension System (HMEPS) is less than $7 million.
The contribution to the Houston Firefighters’ Retirement & Relief Fund is virtually unchanged, while the contribution to the Houston Police Officer’s Pension System increased by about $35 million – although more than $25 million of that was a catch-up from a recent underpayment (http://www.houstontx.gov/finance/five_year_plan_fy2016.pdf).
So, how can $42 million be 95% of $130 million? This is the kind of arithmetic we have grown accustomed to among the anti-pension crowd, and it is another reason that their proposed pension “fixes” lack realistic mathematical or policy grounding.
In any case, the article also says that this $42 million increase in pension payments (out of the $2.391 billion General Fund) is responsible for “crowding out” various services that the City would otherwise be able to provide. But in the same article, the $53 million the City lost due to revenue caps was called “modest.”
Perhaps the best response to these statements is to quote the Merriam-Webster dictionary for the word “propaganda” — “ideas or statements that are often false or exaggerated and that are spread in order to help a cause, a political leader, a government, etc.”
In fact, the costs of pensions to Houston taxpayers are below the average for the U.S. and well below the problem situations found in Illinois and California (http://crr.bc.edu/wp-content/uploads/2013/11/SLP35-508.pdf).
HMEPS and the City of Houston have engaged in a series of major reforms over the last several years – the types of reforms that many cities are just beginning to consider (http://www.hmeps.org/assets/path-to-shared-reform_updated-2-2013.pdf). As a result of these reforms, the goal of 30 year full funding of the plan- agreed to by our City leaders- is well within reach.
We urge the Houston Chronicle and its readers to keep these facts in mind as anti-pension propaganda continues to come out in the future – as it inevitably will.
Sincerely,
Sherry Mose
Chairman