A quarterly magazine of urban affairs, published by the Manhattan Institute, edited by Brian C. Anderson.
• • • • • • • • • • • • • • •
Deep in the Debt of Texas « Back to Story
Showing 13 Comment(s) Subscribe by RSS
Concerning Houston pensions, remember that most city employees received no raises from the mid 1980's until the late 1990's (some waiting even longer) while the rest of the economy was booming double digit style. At the same time, Texas saw the rise of the GOP which went with a huge push for more police. Now the bills are coming due as those officers are starting to retire, no one thinking to contribute more into retirement accounts based on the hopes of the prolonged bull market.
The state of Texas warned the city about this over ten years ago and then the dot com crash and real estate crash across the country did lots of short term damage. Currently, the thought is that since all three city pension systems have averaged over 8.5% for the last 30+ years, the situation will correct itself in time. To an extent this may be true, certainly assisted by the police and municipal employees taking major cuts to benefits circa 2004 (and since), but it also means each system has taken substantially more risk to make those returns.
The city still asks the systems to take pension contribution holidays, still underfunds the police and municipal systems (the vaunted "nearly 100% funded" HFD system can only claim that because the city continued to pay as needed, unlike the other two), and still spends too much on frills will allowing pension debt and infrastructure to go wanting. The debts are owed so any changes to the future will not be enough but most employees are not willing to undergo further cuts until they see HFD and retirees share some of the burden.
Time to give bankrupt Texas back to Mexico, so the next Texas President can destroy it in another unfunded war, and bankrupt the entire country!
But too many, too often listen to the promise of sops from taxing someone richer.
Since Texas is by and large run by Republicans, and Republicans by and large know how to manage government, this problem will be solved. In other words, I have a high degree of confidence in the leadership.
I have no confidence that the leadership will stay in office however. If only Republicans were able to use its expertise in running government in winning elections! It is the curse of the Republican Party that even as it knows how to administer government - certainly in comparison with Democrats - it is abysmal when it comes to winning elections, doing just about everything wrong.
A tiny nit pick if I may
"ven those numbers may underestimate the scope of Houstonís problem, since one of the cityís three pension funds, for firefighters, is administered by an independent pension board that refused to allow Houstonís mayor and his staff access to financial data. "
Our Mayor is Annise Parker so and HER staff would be correct.
Makes no difference to the basic thrust of the article of course but might as well be accurate when we can.
In the 1950's we had on average 15 workers per 1 retired person from around 2015 we will have 2 workers for every 1 retired person (on average in the West).This is the pension issue and the debt issue, falling tax base combined with rising pension and health costs. The West grew on debt, funded from a wide worker base in the post war period, now it has a wide retirement base, a vastly reduced worker base and we can't repay no matter what. If all workers were taxed 100% for ten year, they won't covered the debt, it can only be defaulted on, somehow.
We either default in one go (Argentine style), default in stages (Greek style), inflate our way out ($85 billion a month sound like a hint) or we go into twenty years of 50% tax at a minimum and spending cuts (depression), take your pick.Or we just keep borrowing and hope the repayment will not start until the next generation.
To many were too mean to have kids or better too selfish, in our comsumption through the demographic sweetspot. Now in debt to our eyeballs, to keep the sweet point going an extra decade we are at the stoppers and ageing fast.
I agree we need to cut taxes and expenditure, but we also need to say out loud in we are ageing fast, costs will naturally rise, while tax incoem falls, therefore the public system must change to accommodate the new real demographic structure.
Colin Killian --
To be fair, much of the debt incurred by Texas municipalities is due to our rapid population increase, which has resulted in significant strains on existing infrastructure and services....
- - - - - - - - - - - - -
Together with an Anti-Tax Mania that prevents assessment of adequate impact fees on the new construction projects that house these new arrivals.
Pay As You Go is the one prudent rule for civic expansion. Texans never do it.
Same time, the governor has avoided building new reservoir capacity. The part of Texas water wealth that was set aside for agricultural use in the 1960s and 1970s was committed to use in cities and suburbs. When the Seven Lean Years came with their starving cattle, the Pharoah and his people had nothing set aside.
Too bad no one had read the Bible.
To be fair, much of the debt incurred by Texas municipalities is due to our rapid population increase, which has resulted in significant strains on existing infrastructure and services. Supplying the necessary infrastructure to accommodate growth requires the issuance of millions of dollars of debt. To be sure, a good part of the debt is due to the reasons you suggest, but keeping up with growth is a factor you neglect to mention.
Texas seems a little like America as a whole...they seem to falling into a money/tax trap as a state as America is falling likewise looking and wanting to act like Europe. Of course, I'm talking about severe debt and money obligations that will be hard, if not impossible, to rectify or sustain, yet keeps adding up ! One would think that both America would learn from the European experience and that Texas would learn from NY and Ca.
I'm pretty sure progressives (if you mean that as the commonly understood political label) aren't the people responsible for that silly stadium in Allen. There really aren't many of those in Allen anyway. The place is very heavily Republican; a typical Texas sprawl burb.
The "Texas Miracle" has been built on debt to pay for new infrastructure and highways where 30 years ago there were cow pastures. It is completely unsustainable development, and the fissures in the foundation are starting to show. The coming implosion will have a lot fewer Texans laughing at Detroit (itself once a sprawling boomtown).
It's a poor advertisement for democracy in the US that defined benefit pension schemes weren't abandoned decades ago. In Australia we largely ended them in the public sector about 20 years ago, with some gransfathering of course. It's not as though public sector unions aren't important in Australia but compulsory voting (which helps protect legislators from single issue fanatics and the extremes of self-interest) and the system of preferential voting (i.e. what is sometimes called the single tranferable vote or Alternative Vote) help to keep them from US level excesses.
I've lived in Allen for twenty years. We had a perfectly adequate high school football stadium. Then, the "progressives" move in.
Now, we have a beautiful and very impressive 60+ million-dollar HIGH SCHOOL stadium that has done absolutely nothing for the students and citizens of this community.
Football is fine, in small doses; but this monstrosity does nothing to improve the education or lives of our high school students.
Since moving to Texas my wife and I have always been perplexed by the willingness that people have here to approve any and all bond meansures. The stadium in Allen is just the latest. Perhaps we are more cynical than the natives - having lived in CA our whole lives, we witnessed firsthand what this type of unfettered deferred payment spending can do.