zerohedge.com / by Tyler Durden / Feb 23, 2017
For the past several months we’ve warned that the taxpayers of the City of Dallas, despite all of the tough talk coming out of their elected city council members, would ultimately be forced to bail out the failing Dallas Police and Fire Pension (DPFP) system. And just last night the DPFP board voted 9-0 to approve a plan that would do just that.
The plan to save the DPFP was proposed by Dan Flynn, chair of the pensions committee in the Texas House of Representatives, and calls for Dallas taxpayers to contribute 34.5% of police and firefighter salaries each year into the failing pension system, up from 27% in 2015, plus an incremental $11 million per year. In total, the adopted plan will cost Dallas taxpayers an extra $22 million per year.
That said, the plan also calls for pensioners to grant concessions, including the following:
- Increase in retirement age to 58 from 55
- Increase in employee contributions to 13.5% of payroll from 8.5%
- Elimination of COLAs in the near term
- Elimination of exorbitant interest payments made on employees DROP accounts
Of course, the $7 billion shortfall in the DPFP triggered downgrades to Dallas’s credit rating from Moody’s and S&P in recent months which has wreaked havoc on the city’s bond yields. (chart per Bloomberg).