The State Representative who leads the House Pension Committee told Dallas Friday to max out its credit to fix the ailing Police and Firefighters Pension Fund.
City leaders said it shows how dire the problem has become.
“This is a tipping point for our city, how we’re going to fix this pension,” said City Council Member Jennifer Gates, who is also a member of the Police and Fire Pension Board.
The $1 billion infusion prescribed by Representative Dan Flynn of Van would leave the city unable to borrow for other purposes like roads, parks and libraries.
In a letter to Dallas Mayor Mike Rawlings, Flynn said the city has not shown “an approach of shared sacrifice,” and that the “legislature will be forced to deal with this issue” if the city does not act.
Flynn has said in the past that a state solution would not involve state money.
“The idea that the city hasn’t done anything is just not correct,” Gates said.
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The city has been contributing approximately $110 million a year for police and firefighter pension benefits. But the fund faces a future shortfall of up to $4 billion without major changes.
Fund managers have also suggested a $1 billion infusion from the city.
Flynn’s letter said it should be in the form of Pension Obligation Bonds.
“He’s really, really playing hardball with the city,” said Police and Fire Pension Board Chairman Sam Friar.
The City of Dallas has been considering a possible $800 million public improvement bond referendum in 2017, nearly as a large as the city’s current borrowing capacity of around $1 billion. Flynn wants it all used for the pension problem.
“We would not be able to deliver on all the city improvements and the deferred maintenance,” Gates said.
Beginning Monday and through the next two weeks, the Police and Fire Pension Board is asking members to approve a program of benefit cuts and increased contributions as their share of the solutions.
“It will not solve the problem, absolutely not. We cannot do it alone. We need the support of the city,” Friar said.
Until the city agrees to participate, Dallas Fraternal Order of Police President Mike Walton said members are not convinced pension plan changes they are being asked to accept are fair.
“Since we don’t have a plan, there’s no way officers in good conscious can vote for this. And we’re steadily hemorrhaging officers,” Walton said.
A surge in retirement and withdrawals from pension accounts is blamed, in part, on the pension uncertainty. The city has agreed to increase police and firefighter salaries over the next three years.
“That is much better than what it was, but we’re still hemorrhaging officers because of the unknown,” said Walton.
At a state meeting on pension issues in Austin November 3, Mayor Mike Rawlings said the $1 billion city contribution would require a 130 percent increase in the city property tax rate.
“It’s a ridiculous suggestion,” Rawlings said that day. The mayor was out of town Friday and unavailable for comment.
Eight of the twelve members of the Police and Fire Pension Board are employees and the mayor has accused them of being unwilling to make more severe changes to the plan.
“Taxpayers did not cause this problem and we do not believe we are legally responsible for this problem,” Rawlings said November 3.
The dire situation is blamed on benefit promises that were too generous; risky real estate investments that did not produce as hoped and questionable management in the past.
Current city council members serving on the Police and Fire Pension Board have said an FBI investigation of past leadership is underway.
Flynn’s letter Friday included a chart showing how often past city council members appointed to the board were absent from pension meetings. In 2007, the chart showed city council members were absent 100 percent of the time.
“They had representation on the board. It’s not like they weren’t a part of it. They were a part of it. They have four members on the board. So, if there were red flags to be raised, they should have done it,” Friar said.
Dallas city bond ratings have already been reduced over the pension uncertainty, potentially increasing the cost of borrowing.
But Gates said keeping and attracting public safety workers is a major concern.
“It’s about the money, but it’s also making sure this does not become a public safety threat,” Gates said.
The member election on pension changes continues through November 28 with unofficial results to be posted that day.
