Dallas wins the Bankruptcy Contest

Who would have ever thought that the Houston pension problem would take a back seat to an impending City of Dallas bankruptcy? The word usage on the Dallas problem is phenomenal. Dallas’ present financial condition immediately morphed into the bankruptcy word because of their pension shenanigans.  I am sure Houston Mayor Sylvester Turner was thinking, “Can’t you guys wait until next session to use the ‘B’ word?” Mayor Turner is trying to sell another “kick the can down the road” pension bill, which will allow the runaway spending at the City of Houston to continue until his term in office is over. When Turner was a State Representative, he carried all the pension bills in the House for his hometown local labor leaders – the same bills biting him in the butt now. The irony of the Houston Mayor needing to pass the largest “kick the can down the road” pension bill should be lost on no one. The open discussion of a City of Dallas bankruptcy has everyone wringing their hands in Austin.

Local Dallas and Houston union officials set up a system at the state level over the years that allows union officials to rush to the legislature to renegotiate any deal they did not like offered by Houston and Dallas politicians. I have labeled this the “mommy may I” system. This system is about to come home to roost on the heads of House Pensions Committee Chairman Dan Flynn, his Senate counterpart Senator Joan Huffman, and Lieutenant Governor Dan Patrick.

Senator John Whitmire holds a special category of being a union pension fund administrator and someone who introduces legislation for union labor bosses. Think about that conflict for a second. All of these politicians have lined their campaign coffers with union money. The bigger the problem, the bigger the contribution. Senator Whitmire’s law partners act as lobbyists for the very unions he passes legislation for in Austin.

Lieutenant Governor Dan Patrick was supportive of these back door union deals Monday night at the Kingwood Tea Party. I reminded his host that Dan has always had his hand out to labor leaders and is not a fiscal conservative. Dan’s priority this session is a bathroom bill and he wants you to look the other way on pension matters.

Patrick, Whitmire, Huffman, and Flynn are not alone and have been joined by other pension committee members. This coziness has led to the economic reality of the Dallas bankruptcy. The lie of the Turner plan is exposed by the fact Dallas kept kicking the can down the road just the way Turner is attempting to do. Dallas started kicking the can in 1992 and Houston started in 2001. The fact that the whole scheme blows up is now evident to anyone who can add. Dallas is also seeking a billion dollars worth of pension obligation bonds in addition to local control of their pensions. Dallas politicians want direct control over their destiny by seeking local control back from the Texas Legislature.

Senator Paul Bettencourt is once again standing in the breach. Paul Bettencourt knows that Turner’s plan obligates Houston taxpayers to years of misery without doing a thing to correct the problem. Paul is sponsoring two bills: SB 151 (requires a vote by the public to authorize the use of pension bonds) and SB 152 (allows the transfer of new employees from defined benefit plans to defined contribution plans). Paul is threatening to filibuster Turner’s “kick the can down the road” legislation on the Senate floor. Senator Bettencourt needs our help and support in this battle. There is a website being promoted to help Paul’s effort, Houston taxpayers for pension reform. Please help him out by signing the petition supporting defined contribution plans.

Our local state elected officials are as clueless as Houston City Council Members, a very low bar. Their belief in campaign contributions has always exceeded logic. The Dallas bankruptcy claims are real and Turner can no longer hide the fact that Houston will suffer the same fate. Turner has added much ballyhooed sexy language like corridors and shared sacrifices to his messaging about the latest “kick the can down the road” scheme. Taxpayers need to understand that Turners’s scheme obligates 25-30 billion dollars in taxpayer funds to be used to pay people to hunt and fish. Actually, retirees will be paid more to hunt and fish than current public safety employees will be paid to fight fires and crime. Let that sink in for a minute.

No one is more culpable than Mayor Turner in the financial disasters that have befallen Houston and Dallas. The mayor is advocating borrowing a billion dollars he can’t pay back, combined with a negative amortization scheme that does not morph into real payments until he is out of office with the rest of the City Council. This is the classic kick the can down the road but here comes Dallas, always competing with Houston. Go Cowboys.

Further Reading

Pension debt and the Collapse of the City of Houston

A Greek Tragedy in Houston

A Special Council Meeting for a BIG Problem

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