Texas Legislature Passes Houston Pension Reform

Houston firefighters’ pension opposes the bill, and is considering legal action.


The Texas state legislature has approved a bill to reform Houston’s struggling pensions, with the Senate voting 25-5, and the House voting 103-43, as the bill heads to Gov. Greg Abbott to be signed into law.

“Today is a historic day because we have done what many said was impossible,” said Houston Mayor Sylvester Turner in a statement. “Today’s significance is not marked merely by what we have accomplished, but by what we can achieve now that we have lifted a significant barrier to progress in our city.”

The reform package, known as the Houston Pension Solution, will immediately reduce the city’s $8.2 billion in unfunded liabilities through future benefit reductions, according to the mayor’s office. Under the plan, which uses a 7% assumed rate of return on investments, the city will be required to meet its annual contribution until the unfunded liability is fully paid off in 30 years.

“What passed today does not solve our fiscal problems. We will still have to close a significant budget gap this year, and we project lean times in the next few years,” Turner said. “However, passage of this bill lifts a tremendous burden on the city’s ability to fully serve all its residents.”

Mayor Turner said if the bill didn’t pass, as many as 2,200 jobs could have been lost, including some police and fire department jobs.

The bill still needs Houston voters to approve $1 billion in pension bonds to help support the plan. The reform plan was supported by two of the three pension systems, labor organizations representing city employees, and the Greater Houston Partnership, along with more than 40 CEOs and Houston-area business leaders who signed a letter of support.

However, the Houston Firefighters’ Relief and Retirement Fund opposes the reform bill, and said it is considering legal action to stop it from becoming a law. The firefighters were upset that the final proposal had removed three amendments that had been supported by the firefighters’ pension, but opposed by the mayor’s office.

The removed amendments would have given the firefighters more time to negotiate, and would have protected retired firefighters from being subjected to benefits reductions.

“We’re disappointed in the outcome because this is unfair,” David Keller, chairman of the board of trustees for the Houston Firefighters’ Relief and Retirement Fund was quoted as saying in the Houston Chronicle. “Obviously, litigation is one of the options we’ll have to explore, along with the 2019 session and any other option that comes forward. Now we’re at the point where we have to uncover what the next move is.”

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