Mayor's Office Press Release

Mayor Turner Breaks 16-Year Logjam as Houston Pension Passes Last Step in Legislative Process
Mayor Sylvester Turner: “Today’s significance is not marked merely by what we have accomplished, but by what we can accomplish now that we have lifted a significant barrier to progress in our city.”

May 24, 2017 -- The Texas Senate and the Texas House of Representatives approved the conference report for Senate Bill 2190, the Houston Pension Solution, with the Senate voting 25-5 Tuesday and the House voting 103-43 Wednesday. The historic bill now moves to Governor Greg Abbott’s desk. The Mayor expressed confidence that the Governor will sign the bill.

“Today is a historic day because we have done what many said was impossible,” said Mayor Sylvester Turner. “Today’s significance is not marked merely by what we have accomplished, but by what we can achieve now that we have lifted a significant barrier to progress in our city.”

Houstonians have done what we always do when push comes to shove. We came together and put aside our differences to lift up our city and build a brighter future for our children,” said the mayor.

Passing pension reform has been Mayor Turner’s primary focus since taking office in January 2017. Houston’s large unfunded liability and escalating costs had been cited by credit rating agencies as a significant negative factor in the City’s fiscal outlook.

“If we did not tackle our pension issues head on, they would continue to serve as a ceiling for everything we seek to accomplish,” said the Mayor.  “Every dollar we have saved thanks to these reforms represents another opportunity: Another resource we can use to lift up Houston families. Another dollar we can use on affordable housing, public safety, quality of life and every element we need to make our communities complete.”

The Houston Pension Solution, which experts have called a "national model," will immediately reduce the City’s $8.2 billion unfunded liability through future benefit reductions. Under the plan, which utilizes a more realistic 7 percent rate of return on investments, the City will be required to meet its annual contribution until the unfunded liability is fully paid off in 30 years.

An innovative cost corridor concept controls costs for the City. The corridor serves a risk sharing mechanism - if investments perform too far below established levels, the pension boards will cut benefits or increase employee contributions to bring costs in line.

Legislative approval was necessary because control of the pension systems is housed in state statute. The bill passed the Texas Senate 25-5 and the Texas House 115-29, with bipartisan support in both chambers. It then passed through conference committee, where the two chambers reconciled differences in the bill. Tuesday’s and Wednesday’s votes approved those changes and were the final step in the Legislature.

It was supported by two of the three pension systems, labor organizations representing city employees and the Greater Houston Partnership, along with more than 40 CEOs and local business leaders who signed a letter of support.

“I’d like to thank Chairman Dan Flynn, Chairwoman Joan Huffman, Speaker Joe Straus, Lt. Gov. Dan Patrick and all other members of the Legislature who helped Houston move this bill forward,” the Mayor said. “The Houston Pension Solution is an example of what we can accomplish when all parties join hands to resolve the important issues that face this City. It’s an approach we should continue to take on every issue we face.”

“What passed today does not solve our fiscal problems. We will still have to close a significant budget gap this year, and we project lean times in the next few years,” Mayor Turner continued. “However, passage of this bill lifts a tremendous burden on the City’s ability to fully serve all its residents.”

Pension problems were one of two structural impediments cited by credit rating agencies as significant negative factors. The other is the City’s revenue cap, which requires the City to reject revenue. “I will be asking voters this November to lift the revenue cap so that we can lift up our families, lift up our neighborhoods and lift up our City.”