Bill King on the Houston pension slow-motion crash
Mayor Annise Parker, like the mayor who preceded her, has quickly learned that it's much easier politically to kick this can down the road for someone else to deal with.
Pursuant to the agreement that was approved by council last week, the city will only fund $98.5 million instead of the $133 million the actuaries say is needed. In other words, if the actuaries' calculations are correct, the city just agreed to push off another $35 million to future taxpayers and increase the unfunded liability of this plan by at least that amount. But the actual increase in the unfunded liability will likely be much higher, considering that the increase last year was $192 million.
The agreement also establishes a schedule for the contributions the city will be required to make in the future. This year, the city's contribution of $98.5 million will equate to a little more than 19 percent of the payroll for these employees. That compares to the 22 percent the actuaries said was needed. The agreement provides that the city's contribution will increase by 2 percent each year until it is paying the actuarially required amount.
One might assume from this planned increase that the city will be caught up and making the required contribution within a couple of years. However, that is not the case, because the actuaries also project that the required contribution rate will continue to rise, eventually hitting nearly 30 percent in 2020.
And even these projections are based on some pretty optimistic assumptions.
Eventually, as Bill King keeps warning, we're going to have to settle the tab on all the promises Houston pols have made over the years.