Houston mayor weighs tax hike, pensions

A list of money-saving or cash-generating ideas on its way to the mayor later this month includes increasing taxes, slashing public safety spending, turning the city library over to the county and ending public employee pensions.

Unconstrained by the political reality that makes some of the more audacious suggestions highly unlikely, a 16-member task force has brainstormed 229 ways to save or raise hundreds of millions of dollars for Houston city government.

Debates to come?

The city does not even have the power to implement many of the ideas on its own. The draft list, however, may foretell debates to come if the mayor and City Council seek to act on its more politically sensitive ideas.

For example, dozens of items offer ways to reduce future pension benefits, including ending pensions altogether and borrowing money to cover the current $5 billion in future pension bills for which the city has not set aside money. The list also includes changing from traditional guaranteed pensions to 401(k)-type savings plans, reducing survivor benefits, requiring employees to contribute more and raising the retirement age.

"It's an attack on public workers," said Todd Clark, chairman of the board of trustees for the Houston Firefighters' Relief & Retirement Fund. Clark said the very creation of the task force by City Council last year was about targeting employee pensions. Clark, a member of the task force, said firefighters' pension officials likely will write their own report to the mayor.

The city's three public employee pension systems are governed by state law. Mayor Annise Parker sought state legislation last year to give the city a stronger hand in setting benefit levels, but she could not get a lawmaker to carry such a bill for the city.

Tax hikes suggested

Raising taxes likely also would meet stiff resistance. The mayor and council closed a $100 million budget gap in June without even discussing a tax increase. But two members of the task force put a property tax increase of 1 cent per $100 of assessed value on the list, which would raise an additional $13 million a year for the city. To implement a suggestion of a one-cent sales tax increase, which would raise more than $500 million a year, the city would need state authorization. To avoid political infighting on the task force, members could submit ideas anonymously with a slip of paper in a cardboard suggestion box at all meetings.

Faced with mounting pension obligations, debt service, employee health care bills and yearly operational costs, Council last year voted to create the Long-Range Financial Management Task Force. The group of council members, pension officials, union leaders, business people and community members was charged with coming up with options for addressing the city's mounting bills over the next three decades. The task force has no power to enact the options.

Task force Chairman Mike Nichols said that the task force will attach pros and cons to the options at meetings in coming weeks before submitting the list in its entirety to the mayor.

"I think this is courageous for the City Council and the mayor to look 20 to 30 years ahead," Nichols said.

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chris.moran@chron.com

Source: http://www.chron.com/news/houston-texas/article/Tax-increase-ending-pensions-among-ideas-headed-2451639.php

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