On Eve of Pension Reform Vote; a Letter to the Texas House of Representatives

Tomorrow Senate Bill 2190 — the Houston Pension Solution — will be brought up to the floor of the Texas House of Representatives for debate.

After passing through the Texas Senate on a 25–5 vote earlier this week, the bill now heads to the House for a vote. I’ve written about the need for action on Houston’s pension reform (and the true impact of inaction) before, but it bears repeating — this is the most critical issue facing our city today.

The importance of tomorrow’s vote cannot be understated, as it will play a significant role in determining the course of our city for years to come.

Earlier today I sent a letter to each member of the Texas House urging their support for Houston’s pension reform package — you can read it in its entirety below.

Honorable Members of the Texas House of Representatives,

I am writing to encourage your support of Senate Bill 2190 — Houston’s Pension Solution — when it is brought up to the House floor tomorrow. Simply put — a vote for this legislation tomorrow means that you will have played a critical role in protecting the financial future of the state’s largest city and one of its most powerful economic engines.

Earlier this week, the Texas Senate passed the same bill in a 25–5 vote, putting the city one step closer to achieving meaningful pension reform. The legislation that passed out of the Senate on Monday will put the city’s pension systems back on a sustainable path, pay down the city’s $8.2 billion unfunded pension liability over 30 years, realize $2.8 billion in present value savings, and do so in a budget neutral fashion.

Most importantly, this legislation upholds the promises that the city has made to its municipal employees, police officers, first responders, and firefighters by preserving a secure retirement for all of its hard-working men and women.

As the elected City Controller, my first priority is to ensure that the city is an effective shepherd of taxpayer dollars. Over the past 18 months I have spent a lot of time discussing the positive financial implications that passing Houston’s Pension Solution will have on the city. During that time I have also focused on the potentially calamitous implications that inaction could have on Houston.

The unfunded pension liability has already resulted in credit downgrades by both Moody’s and Standard & Poor’s, with potential future downgrades on the horizon if a reform package is not passed. Also, for the first time in its history, the City of Houston ended FY 2016 with a negative statement of net position due almost exclusively to our unfunded pension liability. In other words, the City currently has more liabilities than assets, which has put us at a negative statement of net position of -$95 million.

Not passing Houston’s pension reform would significantly impact the city’s upcoming fiscal year, as well. Without reform the city will likely be looking at a budget deficit of at least $220 million. There is simply no way to fill a hole that big without a significant reduction of the city’s workforce and the services it provides. Indeed, Mayor Turner has indicated that the city could be facing upwards of 2,200 layoffs and the cutting of essential city services if a reform plan isn’t passed in Austin.

This financial situation is significant and real — and is compounding by the day. Analysis conducted by my office reveals that more than $1 million dollars in additional liability is accrued every day that we don’t pass pension reform. $1 million dollars per day.

The good news is that we are now on the verge of passing a pension reform plan that will almost instantaneously curtail these negative financial developments and put the city back on firm financial ground.

The reform plan before you is one that was born out of “shared sacrifice.” It’s a plan that has bipartisan support locally and in the Texas Senate. It’s a plan that has the backing of the local business community and two of the city’s three pension boards. It’s a plan that represents a real solution to an issue that has evaded the city for decades. The plan before you is Houston’s plan.

I humbly ask for your support of Senate Bill 2190 when it is brought up to the floor tomorrow — the future of Houston depends on it.


Chris B. Brown

Houston City Controller