MetroTex is taking an active role with Taxpayers for a Fair Pension, a coalition of former Dallas Mayors and a diverse group of business and civic organizations. Our decision to do so was voted on by the Board of Directors, who felt it was in our members’ best interests to get involved with the Coalition. We are deeply concerned about a potential $4 billion hit to Dallas taxpayers due to the looming pension crisis. MetroTex firmly supports our police and fire departments, and we want to ensure that the fund is restored to stability as quickly as possible. If it isn’t, the long term impact would be threefold: an insolvent fund, enormous pressure on the backs of Dallas taxpayers, and city which struggles to provide even the most basic city services. Here’s why we’re concerned:
- The city of Dallas’ liability to the pension fund could bankrupt the city
Remember the bank run scenes in It’s a Wonderful Life and Mary Poppins? Hordes of panicked people come running into the bank to pull out their deposits while cash is still available. We don’t see runs on banks anymore because of the FDIC. Unfortunately, there is a run on happening on Dallas’ pension fund and it’s causing big problems.
At the start of the 2016, the fire and police pension fund had $2.8bn in assets. Since then the cash withdrawals from the plan have increased alarmingly – up 641 percent in value over 2015. To cover all of the future withdrawals, the plan was counting on an annual investment return of 8.5 percent, which seems to have been a highly unrealistic expectation. Treasury bonds typically average an annual return of 1.5 – 3 percent.
- Proposed solutions would involve either a decrease in city services or an increase in property tax to pay for increasing pension liabilities; both of which are unacceptable.
One way or another, the city needs to put more money into the fund. The pension scheme has asked that the city make a one-time contribution to the fund of $1.1bn, which is the city’s entire annual budget. If the city were to spend its entire budget on the fund, it would mean a severe cut to all city services, like road maintenance, libraries, parks, trash collection and sewer service. To cover the shortfall, the city is discussing a plan to more than double property taxes. Obviously, MetroTex is against this idea. We believe that City of Dallas taxpayers have paid their taxes on time in good faith, and ought not to be hammered with this punishing outcome.
Think of your current deals. If it were announced that City property taxes were more than doubling, how many of your deals would fall apart before they ever came to the closing table? How many of your clients could afford to keep the homes they have?
- The pension problems have already negatively affected Dallas taxpayers by decreasing the city’s bond rating.
Dallas’ credit score has suffered two downgrades since concerns over the failing police and fire pension fund began. The downgrades impact Dallas’ ability to borrow funds and thus increase taxpayers’ costs.
- Negative publicity has the potential to affect businesses in cities surrounding Dallas, as it fosters a negative attitude towards doing business in the region.
Our aim is to protect the local economy and to encourage new businesses to make North Texas their home. When people think of Dallas, we want them to think of opportunities, not headaches.
Please click here to easily send an email to the Dallas Delegation of state legislators, who are now in session. The future financial health of the city of Dallas is in your hands!