Pension March Madness

The City of Houston gosta get paid. For years, city leaders have operated with the philosophy of spending money that the city just doesn’t have. The Turner administration is no different.

Under Mayor Annise Parker, the media looked far and wide for a way to blame Republicans for the sins of liberal spending by a series of Houston mayors. Last legislative session, Mayor Parker took the position that Republicans refused to give her local control over the City of Houston pensions. Conversely, Parker promised the Houston Police Officers’ Union (HPOU) that she would not seek local control or use the city’s sizable lobbying forces to seek local control. Although Turner’s legislative strategy is a little more sophisticated and he is certainly more eloquent, he shares the same objective as Parker – keep on spending money and kick the can down the road.

Last session, State Representative Jim Murphy offered a bill for local control, which never made it out of committee. This was always the plan. Mayor Parker had to fool people for her last two years in office in order to keep spending money the city did not have in their accounts.

Mayor Turner’s dilemma is different because he was just elected to a four year term with a potential second term in his sights. After many years of working to assist city leaders in the legislature, Turner knew that his sneaky bastard plan had to be far more creative than Parker’s 2015 plan. Turner’s plan is simple: involve all three unions (police, fire, city employees), lobbyists, patsy legislators, and the Lieutenant Governor in the ultimate goal of spending money that the city doesn’t have in the coffers. I will count lining the pockets of lobbyists as a goal for discussion purposes.

Bill King has done yeoman’s work in holding Turner’s feet to the fire for a real solution to the pension problem. King ran on a platform of meaningful pension reform with the solution of moving all new employees to a defined contribution plan. Turner was endorsed by all three unions after he promised to oppose King’s defined contribution plan.

The three unions strongly oppose defined contributions because defined benefit plans are easily manipulated by politicians to benefit the unions. Defined contribution plans remove the politics from the equation. Thankfully and in the face of unfair criticism, King has remained engaged at the legislature in the defined contribution cause. March madness is in full effect and the Houston bracket of bad guy liberal spending is winning the tournament.

Turner knew that he had to employ a kick the can down the road strategy without being obvious. Turner’s first feat was to get Lieutenant Governor Dan Patrick and Senator Joan Huffman to agree with HPOU officials to take defined contribution off the table this legislative session. Ray Hunt, HPOU President, is a smart guy and is always covering bases. I like Ray even though I disagree with him all the time. He is a nice guy who does a very good job for his officers. They are lucky to have him.

Turner also lucked out when Patrick gave Huffman the position of chairwoman of the Senate State Affairs Committee where she is tasked with getting Turner’s bill through the senate.

Word started leaking out last summer that Turner’s scheme would employ a cap on city pension payments. So, the next time you here Turner say he does not like caps – a la the property tax cap – remind the mayor that he is supporting his own version of a cap on city pension expenses, all be it a fake one. Beginning last summer, policy wonks immediately began speculating how Turner’s cap would work and whether it would it be enforceable. Turner was smart enough to call his cap a “corridor” – but, it is really a cap. Turner doublespeak.

State representative Dan Flynn chairs the House Pension Committee. Flynn’s bill, all 246 pages, has been circulated in the business community in order to garner the support of downtown types who are beholden to the mayor for handouts. Thankfully, King and members of the Arnold Foundation began analyzing the bill and sought edits that would tighten up the language. The devil is always in the details. King, Arnold Foundation representatives, and business leaders met with Senator Huffman in order to make crucial and necessary changes to Flynn’s bill. King and his crew spent hundreds of hours analyzing and tightening the corridor/cap language. The goal of these edits is to force the unions to adhere to Turner’s supposed principals. Anything else bankrupts the city.

Needless to say, after all the hours spent by King and others to tighten up the language, Huffman’s substitute filed on Monday is an exact copy of Flynn’s bill. None of the recommendations by King, the Arnold Foundation, and the local business community made it into Huffman’s bill. The good guys were played – Huffman was the secret agent. 

Huffman had probably been informing Turner and his lobby team of King and the gang’s recommendations all along. It should be noted that Huffman and her husband are longtime friends with Ray Hunt and Mark Clark, HPOU’s top lobbyist.

King has vowed to spend his time next year running against Huffman. King does live in her district and I believe that he is seriously considering the possibility. I will support him for his attempt to do the right thing on this issue alone. We will need to work with him on some other conservative issues but don’t forget that Trump came along too.

On Monday, I was present in the Senate chamber and testified on Senator Bettencourt’s SB 151 that was heard immediately prior to the Huffman pension bill. SB 151 requires a vote on the billion dollar pension bond by city voters. Huffman’s bill did contain this language but I suspect it will be stripped out in conference. Huffman has proven that she is not to be trusted.

Robert Miller, lead lobbyist for the city and law partner of Senator Whitmire, has covered his bases. Miller knows that Turner’s goal is a sleight of hand – appear as though he is doing something without actually doing anything. This was also true for Parker.

The goal is to keep spending money and lining the pockets of cronies. This fraud cannot happen if the bill actually worked because the unions would have to abide by paying their fair share. It was never the intention of Mayor Parker, Turner, Miller, or anyone in Austin to have this pension bill work as advertised. The goal was to grab the billion dollars and hand it over to the police and municipal employee unions so their retiring officers can make a fast break with their multimillion dollar pensions. Did you know that city taxpayers are making millionaires out of city workers? You know now.

Notice that I did not mention anything about the firefighters. The firefighters are actually the fiscally responsible adults in the room. Although their pension is far from perfect, it is financially much better off than the other two pensions. The billion dollar pension obligation bonds (POBs) proposed in Turner’s bill go to police and the municipal employees union. The firefighters get none of it.

The story gets worse for the firefighters because their pension is almost fully funded; but, they are being treated like the bad guys by city leaders. The city is asking for large concessions from the firefighters who are being punished for being good stewards of their funds. I say this because the firefighters always stood their ground and made the city fully fund their pension. The other two pensions did not and allowed a succession of Houston mayors to rack up a ten billion dollar unfunded liability.

Basically, the other two pensions have turned a blind eye to the out of control spending at the City and have taken lots of IOUs. Turner’s goal in all of this is to keep spending money that the city simply does not have. Turner’s pension plan is bogus and falls far short of his claims. Even worse, we really do not know the real fiscal health of the private equity investments held by the unions. The billion dollar pension bond could just be a starting point for the taxpayers. We need an audit by qualified, competent auditors who can be held responsible for erroneous financial information of both funds.

Either way, all of the actors in this year’s legislative tournament are behaving badly. Both Dan Patrick and Joe Straus have lined their pockets with union money. Do not think for a second that Joan Huffman acted without Pappy O’Patrick’s approval. Governor Abbott’s campaign finance co-chair is Ray Hunt; so, don’t expect him to do the right thing for Houston taxpayers.

Now is the time to fill out your bracket. My money is on the taxpayers losing bigly. The bottom line is that March madness has nothing on the drama at Texas Capitol. The next big game is Monday when Flynn’s bill is heard in the House.

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