It’s not just the Rust Belt and California that have issues with municipal pensions. Dallas, deep in the heart of Texas is in the midst of a full blown crisis. And this is really saying something as Dallas is a vital and growing city with lots of prospects.
But the promises made to to municipal employees were too much and now threaten to bankrupt the city. Promises were made by politicians based on unrealistic investment returns and now as the baby boomers hit the retirement rolls the money is simply running out.
The retirees want a bailout. The city says it’s not possible. Consternation and heartburn are spreading through shiny downtown and into the surrounding prairies. Good thing the Cowboys are doing as well as they are right now. That’ll help keep a lid on the anger a bit. (I’m almost not joking.)
(From The New York Times)
Over six recent weeks, panicked Dallas retirees have pulled $220 million out of the fund. What set off the run was a recommendation in July that the retirees no longer be allowed to take out big blocks of money. Even before that, though, there were reports that the fund’s investments — some placed in highly risky and speculative ventures — were worth less than previously stated.
What is happening in Dallas is an extreme example of what’s happening in many other places around the country. Elected officials promised workers solid pensions years ago, on the basis of wishful thinking rather than realistic expectations. Dallas’s troubles have become more urgent because its plan rules let some retirees take big withdrawals.
Now, the Dallas Police and Fire Pension System has asked the city for a one-time infusion of $1.1 billion, an amount roughly equal to Dallas’s entire general fund budget but not even close to what the pension fund needs to be fully funded. Nothing would be left for fighting endemic poverty south of the Trinity River, for public libraries, or for giving current police officers and firefighters a raise.