The City of Houston is one step closer to avoiding mass layoffs after the Texas Senate approved a pension reform plan. The mayor's office says the plan would immediately reduce Houston's $8.2 billion unfunded liability.
“If these big budget busting defined benefit pension plans don't work, for the first time there's now triggers that will move them to alternate pension plans like cash balance plans that are used in other parts of the state,” says state Sen. Paul Bettencourt (R-Houston) who pushed for an amendment to give taxpayers a voice in the future.
“Its very good news for citizens because they're going to get a chance to vote on pension obligation bonds, which is something they've been unable to do, but will do if this bill passes the House,” he says.
Ray Hunt, president of the Houston Police Officers' Union, says it was important to keep pensions in place for both police and fire.
“When you have police officers starting off at $42,000 a year, and firefighters still making $42,000 several years into their careers, you have to have something there that is going to attract quality individuals,” he says.
The union continues to fight against a 401k-style plan, but compromised on the amendment.
“If the Houston Police Officers' Pension System falls below 65 percent funding, the city and the pension plan must come up with a cash balance pension plan for new hires moving forward,” he says.
“We're close to 80 percent now and when we get the $750 million owed by the city of Houston, we'll be very solid, so we don't anticipate that happening.”
A vote in the House is expected this weekend.