Wanted: Solutions To Houston’s Unfunded Pension Problem

Next month Houston city councilmembers will be presented with an array of options to reduce the city's unfunded pension obligations. Houston's pensions are underfunded by two and half billion dollars.

Houston is not alone in its predicament.

Pension obligations are crippling many cities and states.

Councilmember Stephen Costello chairs the Budget and Fiscal Affairs committee for the City of Houston. He was a guest on KUHF’s Houston Matters.

“We’re never going to be a Detroit. I think the simple fact that we’re having these open dialogue discussions today is an indication that we’re prepared to start to discuss this issue and to try to make some changes.”

There are three basic ways to reduce pension obligations. The city can raise taxes, cut staff and services or reduce pension benefits. Costello says he will present alternatives to the budget committee next month, with a focus on that third option.

“I think what we need to do is to look at the entire menu and see how each one of these increments, whether it’s applied to new employees coming in or whether it’s applied to everybody in the system, to see what impacts they have so that we have some technical data to be able to sit down across the table from the pension board and be able to say here are our opportunities, let’s talk about it some more.”

Costello says the city needs to look at its current pension commitments in the context of the long-term viability of the city to make these decisions.

There are about 65,000 current employees, family members and retirees who receive City of Houston benefits.


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