Watchdog Group: "Debt Bomb" Could Force Tax Increases in Texas

Nobody likes higher taxes, but a watchdog group says there is a 'debt bomb' ticking away in Texas cities, and it is likely to explode soon and require sharply higher taxes for everybody, News Radio 1200 WOAI reports.

Shiela Weinberg, who heads 'Truth in Accounting,' says the debt is the unfunded obligations to pay pensions and retiree health care for tens of thousands of big city municipal employees, police officers, and firefighters.

"Pensions are getting harder and harder," Weinberg told News Radio 1200 WOAI news.  "As the baby boomers start to retire, governments across the country are finding it increasingly difficult to fund not only employee retiree pensions, but also their retiree health care debt."

She says under a loophole in transparency laws which was pushed largely by municipal governments, the rising obligations to fund future retiree health care and pension debt does not have to be listed along with a city's municipal budget, like, for example, debt for bonds to pay for street repairs or building construction.

Weinberg estimates that, in addition to the tax burden already being borne by San Antonio taxpayers, each taxpayer owes an additional $3,000 to pay for future city employee pension and health care benefits.

But San Antonio is in a relatively good shape compared to other big Texas cities, according to the latest report by 'Truth in Accounting.'  

Weinberg says the average debt per taxpayer in Houston is $12,000 and in Dallas its $21,000.

Weinberg says pension and health care payments upon retirement are a key provision of the contracts and work agreements of  Texas municipal workers, and ‘not paying’ the pension bill isn’t an option.

“What employees, state employees, city employees will say is they agreed to lower salaries, but over time, they were promised these pensions.”

The Dallas Police and Fire Pension Fund is a mess, and the Legislature had to pass a bill in the 2017 session to bail it out, while retirees had to take, in some cases, significant reductions.

A proposal which did not make it to the floor of the Legislature in 2017 would have raised the Texas sales tax to pay for pensions for municipal and state retirees.

Weinberg says that will be extremely problematic, because pensions are nearly unheard of today in the private sector, and she says it will be very difficult to convince taxpayers to pay more to provide benefits to others that they can’t get for themselves.

“Will the public continue to have an appetite to continue to fund other people’s retirement and health care benefits, and when you look at them, many of the municipal employee health benefits are very ‘Cadillac plans,’ she said.


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