Dallas leaders, looking everywhere for money to solve a Police and Fire Pension crisis, are looking now at the Dallas Area Rapid Transit agency.
DART receives proceeds from one cent of the Dallas sales tax rate. Dallas City Councilman Scott Griggs, also a member of the Police and Fire Pension Board, wants one-eighth of that one cent diverted to the ailing pension fund through a voter referendum in November.
Uncertainty about pensions is considered a major factor in the shrinking Dallas police force, while at the same time the city is reporting a surge in violent crime.
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"This is not DART's money. It is taxpayers' money," Griggs said. "And taxpayers deserve a say with this giant crisis we're having, a pension crisis that's turning into a public safety crisis. Do I want to put that eighth of a penny in DART or reallocate it to a public safety fund?"
Griggs and Councilman Philip Kingston, also a pension board member, met with State Rep. Dan Flynn, R-Canton, about the idea in Austin this week. Flynn, who is chairman of the House Pension Committee, is working on a compromise plan to fix the Dallas Police and Fire Pension for approval in the current session of the Texas Legislature.
Currently the pension fund is estimated to be about $3.5 billion short of future obligations. Griggs said Flynn's compromise plan of increased contributions from taxpayers and employees, coupled with reduced future benefits for employees, would still leave the fund up to $600 million short.
Griggs said the $35 million his plan would raise from DART each year could offset talk of a "claw back" on promised retiree pension benefits to close that remaining gap.
"To me, the extent of that option, going $600 million, is shameful and immoral, that option. So we have a very difficult decision to make. Neither option is pleasant," Griggs said.
DART spokesman Morgan Lyons said current state law does not provide for dividing the one-cent sales tax and doing so would cripple the agency's Dallas service.
"That would be devastating on our operations and capital projects. It would be particularly devastating to customers in Dallas because this would be a decision that Dallas would make and so the cuts would wind up in Dallas," Lyons said.
Dallas Councilman Erik Wilson, who is also a pension board member, said his Southern Dallas district needs better bus service and he opposes any DART funding cut.
"DART didn't get us into this, so it should not be a DART responsibility to get us out of this," Wilson said.
Furthermore, Wilson believes the current Flynn compromise plan includes an overly optimistic 7.25-percent forecast for rate of return on pension fund investments that could make the $600 million projected shortage even larger.
"The hole is really bigger, and until we actually get an identification on what that really is, it doesn't matter how much money we put into it," Wilson said.
High interest promised on deferred retirement option plan (DROP) accounts that could not be supported by fund investments is one of the problems that got the fund into this situation. There were also inflated values on risky real estate investments that were drastically marked down later. Current board members have said an FBI investigation of past fund practices and leadership is underway.
Mayor Mike Rawlings sued the pension fund with his own money to restrict DROP withdrawals. Rawlings strongly opposes tax increases to fix the pension problem and his chief of staff said Friday that Rawlings also opposes taking money from DART.
Wilson said more negotiation is needed with all the parties on a solution.
"It's going to be painful," Wilson said. "We said this at the beginning. This is not going to be easy."