Dallas (WBAP/KLIF News) – Dallas’ Public Safety pension fund could be on the verge of seriously hurting the city, so says Mayor Mike Rawlings. He told the state Pension Review Board the way the law allows the pension fund to manage itself is unrealistic, and could lead to huge property tax increases.
“It is horribly ironic, that a city that has enjoyed such tremendous success, that has made Texas so strong and proud, is potentially walking into bankruptcy,” said Rawlings.
He told the Board the fund has a $4-billion unfunded liability. Also, if the ongoing lawsuit over the 1979 pay referendum goes against the city, that would be another $4-billion hit to the taxpayers.
One problem, Rawlings said, is that members of the pension fund, members of the police and fire department, make up a voting majority. That has led to a “fox guarding the hen house” situation. Another problem is the Deferred Retirement Option Program, or DROP. Participants continue working, but divert their retirement checks into a separate account, where they get an 8-10% return. Many of those participants have accumulated more than a $1 million in their retirement accounts.
Rawlings said he knew he was describing a gloomy and dismal outlook to the Board, but 3rd District Councilman Casey Thomas II said the Mayor got it right.
“Well, it’s important we paint an accurate picture of what type of dilemma this has put the city in,” said Thomas. “We want to make sure we’re transparent, open and honest, and make sure they know in Austin that we need their help.”
Help may be on the way in the 2017 legislative session. District 23 State Senator Royce West says Dallas isn’t the only city facing serious consequences.
“Not only Dallas, but the City of Houston has a similar problem, and so we’re gonna have to do something,” said West. “If the state needs to intervene, then a decision will be made, and I’m pretty certain we will.”
At the current rate, the Dallas Police and Fire Pension Fund will be insolvent by the year 2030.
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