Houston’s pension reform deal has been making its way through the legislature, but not without bumps along the way. Both chambers’ pension committees have heard the plan, which passed the Senate Pension Committee by 7-1 and was left pending in the House Pensions Committee.

Testimony showed that firefighters and many taxpayers are on the same side in opposition to the deal, while police, municipal employees, and city officials are the driving force behind the plan.

Testifying in favor of the bill were the chairmen of the Houston Municipal Employee System and the Police Officers Union; Mark Watts, Vice Chair of Greater Houston Partnership; and the Mayor, Controller, Finance Director, and Attorney for the City of Houston.

One of the most telling parts of the House committee hearing was testimony from Chris Zook, Vice President of Houston’s prominent C-Club. The group, consisting of Houston-area business and political leaders, opposed the plan, however, Zook provided a few remedies that could bring even the staunchest of opponents closer to compromise.

Zook urged inclusion of a provision that would force all future employees into a defined-contribution plan if the current pension system falls to less than 75 percent funded. He also proposed an iron-clad provision to enforce Houston Mayor Sylvester Turner’s “corridor,” a trigger that would force the city and unions to the negotiating table.

But committee chairman Dan Flynn (R-Canton) was not open to receiving suggestions on the bill he and Turner crafted. During Zook’s testimony, Kingwood-area State Rep. Dan Huberty attempted to get a deeper explanation of the proposal but was abruptly cut off by Flynn, saying they had to move on.

“We owe it to everyone to have a permanent solution that is a fail safe,” said Zook. “The taxpayers in Houston are the employers to the mayor and every city employee in Houston. Why should they be forced to use a specific plan? They should not be, yet this is exactly what this body is doing.”

The C-Club wasn’t the only group to oppose the plan. Also testifying in opposition were: Harris County Republican Party Chairman Paul Simpson, Richmond business owner Daphne Scarborough, Texas Public Policy Foundation Director of Local Governance James Quintero, former Houston mayoral candidate Bill King, the Houston Firefighters Union, as well as dozens of Houston firefighters.

Many concerns were echoed by multiple witnesses; most often heard were the lack of a pathway for defined-contribution plans, unrealistic investment rates, and a lack of an enforcement mechanism.

The Senate version of the plan originally carried language that potentially opened the door for a plan change in the future; however, committee chair and bill author Joan Huffman (R-Southside Place) provided an additional 200+ pages ahead of the hearing removing that language. The committee substitute was almost a carbon copy of Flynn’s bill except it kept the voter approval on pension obligation bonds intact, for now.

Even that isn’t set in stone because the way it is currently written, Huffman’s bill would allow the City of Houston to issue the intended $1 billion in bonds ahead of the September 1 effective date. Thus voters still wouldn’t have a say. This is in direct opposition to the resolution that Harris County Republican Party precinct chairs voted to support. While future obligation bonds would be curtailed, Huffman’s bill allows for essentially a one-time “opt out” of voter approval, provided Mayor Turner can get it approved by council.

Along with the HCRP executive committee’s proposed reforms, a poll of registered Houston voters conducted by Texans for Local Control, a Houston business group, showed that from the sample selected, 64 percent want defined-contribution plans for new city employees, and 70 percent want a vote on pension obligation bonds.

Just days after the hearings, Turner said in council, “We are moving forward and I anticipate a very positive result coming out of the legislature.”

Houston taxpayers concerned about the issue need to hold area lawmakers’ feet to the fire and ensure that their interests are being considered and not just those of elected officials and union members.

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Charles Blain

Charles Blain is the president of Urban Reform and Urban Reform Institute. A native of New Jersey, he is based in Houston and writes on municipal finance and other urban issues.


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