From 2003 through 2011, in the city’s general fund, recurring expenses have exceeded recurring revenues by about $430 million. The majority of this deficit was financed by issuing 30-year pension bonds. Also, the city has been selling off everything that is not tied down.
The mayor was still able to pull a few more rabbits out of the hat for the upcoming year, like deferring pension contributions, spinning off the convention center with five years’ worth of rent paid in advance, and selling property to a controlled subsidiary. But the hat is just about hareless at this point. As a result, the city is being forced to make real budget cuts that citizens are going to feel.
Michelle Mitchell, the former Goldman Sachs banker who served as the city’s chief financial officer during most of Bill White’s administration, gave a chilling five-year projection of the city’s finances just before she retired last year. Her projections showed ever increasing deficits for as far as the eye could see without draconian budget cuts. She placed most of the blame on the city’s pension plans, flatly stating that they are unsustainable.
Read the whole thing. Houston’s financial difficulties are not going away any time soon, and indeed the pension liabilities suggest strongly they will get worse, steadily, without significant revisions/reforms.