Pension teamwork

Political infighting threatens a reform plan key to Houston’s financial stability.

Consider it the political equivalent of the infamous 1954 Cotton Bowl Classic, when Alabama’s Tommy Lewis leaped from the bench to tackle Rice University running back Dicky Moegle in one of the most preposterous events in college football history.

State Sen. Joan Huffman is trying to pull off the legislative version of that 12th man tackle.

For years, the message out of Austin on pension reform has been that the city of Houston and our three public unions bear the burden of striking a deal. Apparently the rules of the game have changed.

Now Huffman, alongside state. Sen. Paul Bettencourt and former mayoral candidate Bill King, is trying to weigh in from the sidelines to make some deals of her own.

Huffman, a Republican, has inserted a requirement that there be a public referendum on $1 billion in pension obligation bonds, or POBs. That cash infusion is intended to make up for a decade of City Hall underfunding the municipal and police pensions. The city already owes the pension programs that $1 billion. Using the POBs gives the pensions a lump sum up front.

Josh McGee, vice president of public accountability at the Laura and John Arnold Foundation, a Houston-based philanthropic organization with an expertise in municipal finance, has described that $1 billion as politically necessary to passing pension reform.

Normally we’d throw our full support behind requiring a vote. Whether at City Hall or an exurban municipal utility district, people deserve a say on public debt. Houstonians also should cast a skeptical eye at massive public bonds that have a curious way of filling the coffers for law firms and bond traders that make their living at the public trough.

However, there is also no question that this $1 billion is key to larger reform. The smart move, as McGee recommends, would approve the current deal and mandate a vote on any future bonds.

So why do advocates like King and Bettencourt insist on throwing a wrench into the plan the city and unions crafted?

The city’s financial future hangs in the balance; taxpayers deserve to know.

King has spent the past year criticizing Mayor Turner’s pension deal by circulating emails, talking with Republican-leaning groups and personally lobbying legislators.

But when he met with the Chronicle editorial board alongside McGee last week, King struck a conciliatory tone. He described the merits of the pension deal and emphasized that “nobody is trying to kill it.”

The former Chronicle op-ed columnist said that the $2.5 billion in cost cuts are “real and substantial.” King also said that the so-called “corridor,” which functions as a cap on the city’s liability as a percent of payroll, has some loopholes that “can and will be fixed.” McGee was more confident about the corridor mechanism. So why attack the plan? As King explained, he and Bettencourt are pushing for a public referendum vote on the POBs as leverage that will force the mayor to hold a different referendum on 401(k)-style defined contribution retirement plans, which are not in the pension deal now.

They’re risking the whole deal in order to promote their own agenda.

It is a risk that Bettencourt and Huffman are willing to take — even if they’re gambling with someone else’s money. Legislators will get to take a two-year break when they’re done scuttling a plan approved by City Council. Turner will have to balance Houston’s budget.

The plan may not be perfect in everyone’s eyes, but it undoubtedly puts the city on firmer financial footing. Waiting two more years for a different deal will force layoffs at City Hall, stick taxpayers with more debt and leave our pensions in a more precarious situation. This is the closest the city has come to muchneeded financial reform, and there is no reason to throw it away.

Politics may be a contact sport, but when it comes to Houston’s financial stability everyone should be on the same team.