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Senate Advances Houston Pension Reform Package

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Legislation includes reforms sought for over a decade; Requires voter approval of bonds

(AUSTIN) — Today, the Senate approved Senate Bill 2190, a major step to protect taxpayers while honoring our obligations to the men and women who risk their lives to safeguard our communities.

SB 2190, authored by State Senator Joan Huffman (R-Houston), is the result of years-long negotiations between the City of Houston, municipal employees, police officers, fire fighters and taxpayer advocacy organizations to solve the financial crisis plaguing city’s pension funds.

“A combination of unrealistic investment assumptions, unsustainable employee benefit packages and the City of Houston’s failure to fund its annual obligations have produced $8.1 billion in unfunded pension obligations and fewer police officers on the streets,” Huffman said.

“The prospect of higher taxes or bankruptcy for the City of Houston are not acceptable. To be clear, the pension reform legislation advanced by the senate is only one step in a long and difficult process. The City of Houston, municipal employees, police officers and firefighters have all made concessions and commitments that, if honored, will finally improve the financial health of our pension funds.”

Senate Bill 2190 Highlights:

  • Requires voter approval before City of Houston can issue bonds to fulfill past obligations
  • Reduces unfunded pension obligations by $2.54 billion
  • Provides roadmap to “cash balance” plans to reduce costs for new employees
  • Secures reduced benefit concessions from public employees
  • Prevents City of Houston from raiding pension funds to pay for non-pension expenses
  • Requires City of Houston to payoff unfunded pension obligations over a 30-year fixed/closed amortization period
  • Strengthens pension fund investment guidelines

Statement by Lt. Governor Dan Patrick:

“Senate Bill 2190 goes a long way in protecting the pensions of our first responders as well as the interests of Houston taxpayers. It addresses a problem that has been building for thirty years and will help put the City of Houston on sound footing. This has been one of the most challenging pieces of legislation to pass in my ten years in public office because there are so many stakeholders. However, in the end, the vast majority of those stakeholders agreed this is the best way forward. I commend the commitment, leadership and hard work of Sen. Huffman and all those who helped pass this historic legislation.”

Statement by Ray Hunt, President of the Houston Police Officers Union:

“The concerns with Senator Huffman’s bill regarding police pensions have all been addressed to our satisfaction. We applaud Senator Huffman and her colleagues who voted yes along with our friend Lieutenant Governor Dan Patrick for staying the course to get this important legislation passed in the Texas Senate.”