Houston Leadership Vacuum: Mayor Parker shares blame for pension fund mess

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News that the City of Houston is considering bringing a lawsuit against the firm that provided the analysis that led to the 2001 changes in the HFD system by then Mayor Lee Brown is just another case of Mayor Annise Parker trying to wash her hands of the blame for a policy on which she has had plenty of input.

What’s amazing to me is that, in the linked story above, the reporter is continuing to run with the preferred (by the Parker administration) theory that Mayor Parker is dutifully working to bring herself up to speed on a situation with which she has little history. You see the word “blindsided” thrown around a lot when referring to Parker’s role in this.

In a recent story, Mike Morris again parroted the city line that Mayor Parker is an unwilling victim in all of this mess.

See: Parker’s ‘good government’ approach could cause budget pain – Mike Morris, HoustonChronicle.com

(In the interest of respecting the Chron’s pay-wall I’m just going to pull a quote from the story and suggest that you go and read it all):

“I’m trying to change the game. At some point, one of us has to say, ‘We are going to change the rules because that’s not going to continue to work,’ ” Parker said. “It means that we have a strain now and there’s things we could be doing that we’re not doing, but three mayors back did it to me. I’m not going to do it three mayors forward.”

The emphasis in the above quote is mine. Because the idea that this was “done” to Mayor Parker, and that she didn’t have a hand in the issue, requires ignoring her own words and other matters which have long been part of the public record.

To wit, the following stories:

Labor in the news – AFL-CIO, 19 May 2004 (archiving a Houston Chronicle story)

City employees would work longer, pay more and get less under a new retirement package proposed Tuesday by Mayor Bill White to slash the $1.9 billion shortfall in Houston’s main municipal pension fund.

White’s proposal, which must be negotiated with the pension board, is much like the plan the city had in 2001 before more generous pension benefits went into effect. Those benefits have proved unaffordable.

White also proposes to add the city-owned Hilton Americas-Houston hotel to the pension fund’s assets to generate more revenue.

City Controller Annise Parker said she has a lot of questions about such a deal.

“I’m not quite sure of the legality,” she said. “If I were a pension board member and they offered this asset, I would demand control. I think it would be hard for the city to give that up.”


City puts hotel deeper in debt to bolster bloated City pension system – Jenna Colley, Houston Business Journal:

“A $300 million reduction in the pension’s unfunded liability is a big chunk out of way without the city having to put any cash out,” says Parker. “We don’t actually transfer the title of the hotel.” Under the deal, the city will give up its lien on the hotel to the pension system.

The pension system board will have no control over the actual hotel, which is managed and operated by Hilton Hotels Corp.

As part of the deal, the city will have to pay at least 8.5 percent or about $26 million annually in interest on the $300 million. Under the deal, however, the pension system has the option of brokering that note to third parties.

At some point in this process, then-Controller Parker’s “concerns” went away and she became a staunch supporter of the Hotel asset plan. She also supported borrowing to pay pension obligations before she threw her predecessors under the bus for it:

Here’s how to fix the city’s pension mess – Annise Parker, Chron.com, 9 May 2004

In the short term, the city may need to issue pension obligation bonds. This amounts to taking on new debt to pay an existing debt. It is similar to taking out a home equity loan to meet your everyday expenses. It’s not a good idea. However, given the city’s current financial difficulties, its [sic] an idea that may have to be considered to get through the immediate crisis.

Emphasis supplied.

Later on, she used the hotel asset swap and touted her role in adding to the entire mess as campaign fodder:

InsideOut at City Hall: First Year – Annise Parker, Outsmart, Jan 2005

As the city’s chief financial officer, my office provided the mayor and council with assessments of Propositions 1 and 2 and the pension crisis. I also presented the council’s only written analysis of the complicated Hilton Americas hotel transfer, a critical component of the mayor’s pension proposal.

Still up in the air is my proposal to have the controller or a representative serve on the pension board. It’s a perfect fit with the controller’s responsibility as the city’s financial watchdog and a way to bring some independent oversight to the pension fund’s investing policies. There would be no conflict of interest because I have no vote at the council table.

In addition, she later turned on Mayor Bill White, with whom (in her own words) she worked “closely” on the pension situation:

Houston paying now for past bonds, tax cuts – Taxrates.ee

The city of Houston’s budget crisis that has resulted in 747 employees getting pink slips last month and likely will close pools and community centers did not happen overnight.

It has been brewing for the better part of a decade, the result of, among other things, spending more while taxing less, borrowing to pay bills, raiding its piggy bank and channeling ever more payroll dollars into funds for retirees. A public hearing on the coming year’s budget is scheduled for June 14.

Mayor Annise Parker inherited a city that she said last year had been spending more than it had taken in “for years.” Parker, who served as controller or councilwoman since the 1990s, has refused to second-guess her predecessor, Bill White.

However, she has distanced herself by highlighting that this year’s budget would not use pension obligation bonds to meet the city’s commitment to retirees — a signature feature of White’s budgets. The city borrowed $245 million to pay pension benefits during the White years. The money spent, the city now has to pay $34 million in principal and interest in the coming fiscal year.

“One of the side-effects of term limits is mayors push bills down the line, and Parker happens to be at the point in the line where the bills are coming due,” said Nancy Sims, a University of Houston adjunct professor of political science.

In a recent op-ed article in the Houston Chronicle, White wrote that the city would not have been able to obtain reductions in employee pension benefits without relying on some borrowing to make the pension funds more secure. He also cited a 2004 Chronicle op-ed piece by then-Controller Parker in which she wrote, “In the short term, the city may need to issue pension obligation bonds.”

Clearly Mayor Parker’s current assertion that she was “shocked” by the state of Houston’s finances upon becoming mayor rings hollow. It’s very clear, through a reading of the public record, including Parker’s own words, that she was intimately involved in putting the city in the current financial hole.

This is not to say that Parker’s current plans lack merit, or that her refusal to continue covering the current pension debt with additional borrowing is not a good idea. Quite the contrary. It could be argued that cuts, as painful as they may be, NEED to be made and made immediately.

However, the recitation of the public line by secretarial journalists runs counter to the fact-based public record that suggests the Mayor has been a willing accomplice, during her time as City Controller, in helping create this situation.

The public record also suggests that Houston’s leadership vacuum has been present for years. Despite all of the glowing press given to Mayors Brown and White by the Houston Chronicle, this issue has been simmering below the surface, unnoticed and unreported, for years now. At least since 2001. That it’s just now coming to light reveals a blind spot in local media that needs to be corrected.

Of course, the Chronicle will point out that they have been running a series of Bill King warnings on this issue, but these typically don’t make it into their hard news reporting; and currently, King has been taking part in the same revisionist history as he ramps up for what many believe is a planned run for the Mayoral office.

Houston’s taxpayers deserve better than the shoddy fiscal management that’s been provided by their elected officials and the secretarial reporting by their media outlets, all of which have allowed these problems to fester under the surface for years now.

1 Comment

  1. This leadership vacuum will continue as long as term limits are in place. Sure, council members start acting like they own the place — but that’s a hell of a lot better management than the short-term renters we have in City Hall now. Council members who might be holding the bag in ten years tend to make longer-term decisions.

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