SB 151 passed the Texas Senate yesterday. This is the bill Sen. Paul Bettencourt filed which requires voter approval on future pension bonds. The bill passed 21-10. The bill passed on party lines with the sole exception of Sen. John Whitmire, who also voted for the bill. This is huge win for Texas taxpayers.
Pension bonds were first authorized by the Legislature in 2003 in what is now Local Government Code §1.07. There was very little discussion or debate on the bill and it does not specifically state that voter approval is not required, but that is the way the law has been interpreted.
Since then, three cities, Houston, Dallas and El Paso have issued about $1.3 billion in bonds without voters having any say in the matter. By the way, Houston and El Paso are now insolvent and Dallas almost certainly will be when they issue their annual audit later this year. And notwithstanding dumping $1.3 billion in borrowed money into their pension plans, all three still face massive pension debt.
There is nothing inherently wrong with using bonds to help solve the pension crisis. But only if they are a bridge to a permanent solution, i.e., phasing out the defined benefit pension plans. If this were the proposition placed before voters, I would support the issuing bonds. However, to use them a crutch to double down on the defined benefit model is a terrible idea. Voter approval provides a check to make sure bonds are used in a responsible manner
It is not clear whether Bettencourt's bill actually become law. The bill would almost certainly pass on the House floor, but it will first have to get out of the Pension Committee. The chairman of that Committee, Dan Flynn, has, so far, been unenthusiastic about voter approval of pension bonds or phasing out defined benefit plans.
There are two Houstonians on the Pension Committee, Dennis Paul from Clear Lake and Dan Huberty from Kingwood. I would encourage everyone to contact their State Representative and encourage them to support SB151 in the House.