This week at City Hall, I provided an important update on my administration’s progress on several financial challenges facing the City that began long before I became mayor.
I invite you to watch the video above and review the documents I provided to City Council members.
In 2016 and 2017, Moody’s warned the City was facing three structural barriers that threatened its credit rating and viability. Those concerns included the unfunded pension liability, Other Post-Employment Benefits (OPEB), and the revenue cap.
Before pension reform, the City’s projected unfunded pension liability was $8.2 billion and growing.
We have worked hard to address the liability, and today, with the reforms we have created, the unfunded liability has dropped to $1.49 billion, which is a decrease of $6.72 billion. Not only the unfunded liability was tremendously reduced, but also the cost avoidance of projected annual pension contribution which would have deepen the City’s financial deficit but for pension reform.
To put it simply, we are paying down the mortgage by reducing the amount of debt the City owes. As a matter of fact, separate from the Pension Obligation Bond, the overall General Obligation Debt has been reduced by $724 million since 2016. I know some people have resorted to spreading false doom and gloom predictions about Houston, but I assure you we are handling the City’s financial business. I am grateful to the City Council and my team for working hard to address these issues.
It is important to note that the three pension systems are healthier today – municipal, police, and fire because of the pension reform we have put in place.
You may recall reading that City Council approved pay raises for our hardworking employees in the news. Houston Firefighters will get an 18 percent pay raise over three years at the cost of $182 million. Our municipal employees, the people who pick up your trash, and maintain parks and streets, will get a nine percent over three years at the cost of $77 million and police officers will receive a 10.5% pay increase over three years at a cost of $125 million to the City.
The Firefighters Pension System is suing to stop the City from continuing with pension reform. The truth is that If the lawsuit is successful and pension reform is blocked, then all the progress this City made will be wiped out. The firefighters’ pension is now 93 percent funded – compared to just 80 percent funded pre-pension reform – and is actuarially sound, and it is working for them and the greater good of the City.
When I came into office, I faced a historic deficit, and our City has weathered seven federally declared disasters in the past six years.
I can assure you that my administration will stay on top of the current financial obligations and continue working to keep Houston a strong and resilient city for the future.
Mayor Sylvester Turner