Dallas Mayor Mike Rawlings wrote a letter to the city’s taxpayers Thursday, asking for their support in making changes to a proposed pension bailout he says is “unnecessarily expensive for Dallas taxpayers.”
The Dallas Police and Fire Pension, which Rawlings calls “one of the worst-managed retirement funds in the country,” is in a $3.7 billion shortfall.
Rawlings’ letter takes aim at a taxpayer bailout proposed by House Pensions Committee Chairman Dan Flynn (R-Van). Rawlings called for changes to the bill in Austin earlier this month.
Flynn “rejected all of our attempts at a compromise that would make HB 3158 fiscally prudent,” Rawlings wrote.
His letter Thursday summarizes five shortcomings to Flynn’s proposal, including a claim that it would make taxpayers pay at least $1.35 billion over the next 30 years and saying it’s a “taxpayer bailout without true taxpayer control.”
Thursday’s letter proposes amendments in two categories: Taxpayer funds and governance.
Simply put, Rawlings proposes the taxpayers be able to pay the fund based on the actual number of police and fire employees rather than a number the city intends to hire, and that citizens be given the majority on a newly-formed pension board.
Read the full text of Rawlings’ letter below:
"I write to update you on the latest chapter in our efforts to save the Dallas Police & Fire Pension System without impairing our city’s future. First, thank you for supporting the city’s efforts to solve the pension crisis. We need your voice heard across Dallas and down to Austin. Please continue to be vocal about a responsible solution; specifically, please urge your lawmakers to support my amendments to HB 3158, the Dallas pension bill.
The news I bring you is not good. House Pensions Committee Chairman Dan Flynn, of Canton, continues to press ahead with his unprecedented and unnecessarily expensive Dallas pension taxpayer bailout without the indispensable and reasonable changes we requested to protect you, the taxpayer. This is the same taxpayer bailout that I and several other leaders testified against in Austin earlier this month. After our testimony, we went back to the numbers to offer up fiscally conservative compromises. We thought they would be well received by a purported fiscal conservative such as Chairman Flynn. Surprisingly, Chairman Flynn’s office has so far rejected all of our attempts at a compromise that would make HB 3158 fiscally prudent.
Therefore, we have no choice but to advocate strongly against Chairman Flynn’s Dallas taxpayer bailout as it was passed out of the House Pensions Committee. Despite the city’s and the civic and business community’s best efforts, I am not optimistic that we will find other means to make necessary amendments to protect Dallas taxpayers from this decades-long taxpayer bailout. Let me reiterate why I am opposed to the Flynn taxpayer bailout:
1. It obligates City of Dallas taxpayers to pay at least $1.35 billion over the next 30 years.
2. Taxpayers will be required to pay among the highest contribution rates to the fund of any city in America.
3. We will either give up essential services or we confront a substantial tax hike. Last fiscal year, the city spent $118.5 million on pension contributions. This bill commits us to $151 million by 2018 alone. That $33 million in increased taxpayer money is more than we have in our budget for animal services, recreation centers, and senior services combined.
4. The Flynn taxpayer bailout plan fails to fix the fundamental issue that led the Dallas Police & Fire Pension Fund to become known as one of the worst-managed retirement funds in the country: its dysfunctional and failed governance structure. It is a taxpayer bailout without true taxpayer control.
5. Flynn’s bill forces taxpayers to put their limited resources toward bailing out past mistakes of the pension fund and will severely limit our ability to recruit and retain new officers and firefighters.
Throughout this process, I have said that even though the city made every contribution in full and on time, the city is willing to do even more, through increased taxpayer contributions, to save the pension. But I have also always said that we must share the pain of past mistakes. Police officers, firefighters and taxpayers must all be in this together.
So, our proposed amendments focus primarily on two concepts:
1. Taxpayer funds: giving flexibility to future Dallas City Councils, your representatives, to pay the fund based on the actual numbers of police and fire employees we hire. The Flynn taxpayer bailout plan requires us to pay into the fund based on the number of employees the chairman thinks we should hire, for an unlimited number of years. This is obviously unacceptable. We are willing to compromise and so we generously agreed to extend the city’s “floor” on contributions to seven years instead of two. With the seven-year floor, Deloitte, our actuary, has confirmed that the fund would be actuarially sound, yet Chairman Flynn insists on unnecessarily high contributions from the city for the next thirty years or more.
2. Governance: a new governance system that is truly accountable to the people, the taxpayers, through a majority number of seats on the board. Philosophically, it is wrong not to let taxpayers have the authority they deserve. Practically, without citizens holding a majority, the status quo of the financial nightmare is bound to repeat itself, with representatives of the beneficiaries voting themselves unrealistically high benefits. We have proposed that the eleventh trustee of a newly formed pension board should be selected by the state comptroller if the city manager and nominations committee cannot agree on a trustee within 60 days.
With our amendments, Deloitte, has concluded that the plan is fully funded in 37 years, below the State Pension Review Board’s 40-year benchmark. Simply put, Chairman Flynn’s taxpayer bailout is unnecessarily expensive for Dallas taxpayers. Our actuary verifies that our amendments would save the fund without overburdening Dallas taxpayers.
In closing, we are doing everything in our power to save this fund for our police and firefighters. They are brave men and women who have sacrificed a great deal and deserve a fair pension. The state promised them one and we want to deliver it.
However, we can deliver the fair pension without this taxpayer bailout. My amendments prove we can. Without our amendments, the current taxpayer bailout package must be voted down. A vote for this bill is a vote for an unprecedented Dallas taxpayer bailout.
Please advocate for our amendments to protect Dallas taxpayers. Write and call your legislators and tell them to support Mayor Rawlings’ amendments to House Bill 3158.
Michael S. Rawlings
Mayor of Dallas"