In the latest TREC Webinar, Josh McGee, chair of the Texas Pension Review Board, briefed members on how the Texas-sized problem of pension debt is threatening our state.
Here are the key takeaways:
- Pension debt in Texas has quadrupled since 2007 in Texas’ largest cities. Today, state and local governments across Texas owe at least $67 billion in public pension debt.
- Dallas, Houston and Austin owe more in pension debt than they earn in revenue. This puts city finances at risk and making it increasingly difficult for cities to keep promises to their employees.
- Texas is not alone—rising public pension debt is a national trend. But Dallas is second only to Chicago in public pension debt. McGee suggested the trend arises from a combination of three factors including undue optimism about the economic environment, the complex regulatory structure of many pension systems and recent policy changes.
- Consequences of Dallas’ pension crisis are grave. The city has suffered the loss of at least 99 police officers from the department in 10 weeks, decreasing the ratio of police to civilians and putting public safety at risk. The city has also suffered three downgrades to its credit rating by Moody’s Investors Service.
- Solutions will require shared burden. To improve the financial stability of their plans, McGee suggests Texas cities commit to pay down current debt within 30 years, establish responsible investment practices and adopt new systems that are simpler and easier to manage for new hires.
In case you missed it, watch the recording below:
To help find a resolution, The Real Estate Council has joined a coalition of former Dallas Mayors and a diverse group of business and civic organizations concerned about a potential $4 billion hit to Dallas taxpayers due to the looming pension crisis. We will continue to keep our members informed about this issue facing our city.