A city of Houston pension reform deal that could eliminate $8.1 billion in unfunded liabilities is matriculating through the state legislature this month.
Senate Bill 2190 was advanced by the Senate State Affairs Committee March 27 with a 7-1 vote. SB 2190 will soon be voted on by the entire Texas Senate.
A similar bill in the state House of Representatives is still in the Pensions Committee pending a vote over the next two weeks, said Jessica Beemer, North Sector manager for the office of Houston City Council Member Dave Martin.
Houston Mayor Sylvester Turner is expected to testify before the House Pensions Committee April 3. The committee, which includes Lake Houston-area Rep. Dan Huberty, R-Houston, meets Mondays at 2 p.m.
You can watch the committee meeting here:
In the pension reform deal, police officers, firefighters and municipal workers agreed to reduce benefits to lower the unfunded pension obligation by 30 percent or $2.5 billion and the city agreed to take out pension obligation bonds to repay the $750 million it borrowed from the plans in the past, Turner said.
Without a deal in place this session, more than $134 million will be added to the city’s budget deficit and more than 1,000 city employees could be laid off, Turner said.
“Is it the perfect pension reform deal,?” Turner said. “No. But is it a good deal? Yes.”
However, the pension reform deal faces a legislative challenge from Sen. Paul Bettencourt, R-Houston. Bettencourt’s Senate Bill 151—which creates a requirement for voter approval for municipalities to issue pension obligation bonds—passed the Senate State Affairs Committee with a 7-2 vote March 20.
“A public vote on pension obligation bonds is an important check and balance that was omitted out of the so-called reforms last decade,” Bettencourt said. “As a result of the original bill that left out voter approval, municipalities have been putting taxpayers under an additional $1.2 billion of debt. SB 151 puts approval of pension obligation bonds back where it belongs, in the hands of the voters.”