ON THE ISSUES: November 7, 2017 Election
Tuesday, November 7th is Election Day! This election, Houstonians will be presented with a ballot that asks them to vote "For" or "Against" five municipal propositions that, if all passed, will issue bonds for the purpose of (1) funding a portion of the City of Houston's unfunded pension liability; (2) funding public safety improvements; (3) funding park improvements; (4) funding improvements that support public health and wellness, sanitation, and other essential City services; and (5) funding library improvements.[1]
Municipal candidates typically drive voter turnout in off (odd) year elections in Houston, but term limit changes have left the 2017 ballot without a mayoral, controller, or city council race to drive voter participation. While the November 7th ballot will not include municipal candidates[2], the propositions up for consideration do address City financial matters that impact all Houstonians.
Houston Pension Reform
In May 2017, the Texas Legislature approved pension reform measures stemming from the Mayor's "Houston Pension Solution" that afforded municipal workers, police officers, and firefighters with more sustainable pension systems. The pension reform package will reduce the City's estimated $8.2 billion in unfunded pension liability by more than 30 percent by incorporating approximately $2.9 billion in cuts to the pension systems, and set a hard 30-year amortization period, among other things. In addition to the package of cuts, the City agreed to fund the police and municipal worker systems, which were underfunded. To fund these two systems, the City seeks to issue approximately $1 billion in pension obligation bonds to pay pension debt in connection with the underfunded municipal and police pension systems over a closed 30-year amortization. The pension plan also calls for immediate cost reductions in the three pension plans, which were achieved by employees agreeing to approximately $2.9 billion in reductions that include cost of living adjustments, among other things. Finally, the pension reform plan includes the corridor concept. Should anticipated pension costs grow outside the corridor limits, the corridor requires the City and the pension systems to return to the negotiation table to make adjustments.
The issuance of the approximately $1 billion in pension obligation bonds to help pay pension debt of the police and municipal workers' systems is contingent on the outcome of ballot Proposition A. Should Proposition A not pass, the police officers' pension reductions of $1.07 billion will not take effect, and municipal workers may opt out of their $768 million share of the $2.9 billion in cuts across all pension systems, which could amount to a combined approximate figure of $1.8 billion in cuts potentially no longer being part of the package of cost reductions to the pension systems.
The proposition ballot language is as follows:
City of Houston, Proposition A
[3]
Shall the City Council of the City of Houston, Texas, be authorized to issue bonds of the City, which may be called City of Houston, Texas, Pension Obligation Bonds in the amount of $1,010,000,000, maturing serially or otherwise at such times as they may be fixed by the City Council, not to exceed 40 years from their date or dates and bearing interest at any rate or rates, either fixed, variable or floating, according to any clearly stated formula, calculation or method, not exceeding the maximum interest rate now or hereafter authorized by law, and to sell said bonds at any price or prices, all as shall be determined within the discretion of the City Council at the time of issuance, and to levy a tax upon all taxable property in the City annually sufficient to pay the principal of and interest on the bonds (together with any bonds that may be issued to refund the bonds) as it accrues or accretes, and to provide a sinking fund for the payment of the principal of the bonds (together with any bonds that may be issued to refund the bonds) as they mature, as well as all payments under any credit agreements, such as tax to be levied without being limited by any provisions of the City's home rule charter limiting or otherwise restricting the City's combined ad valorem tax rates or combined revenues from all City operations, for the purpose of funding a portion of the unfunded liability of the City with respect to the Houston Police Officers' Pension System and the Houston Municipal Employees Pension System as contemplated by the pension reform plan contained in Senate Bill 2190 (adopted in the 85
th (2017) Texas Legislature, Regular Session), and all matters necessary or incidental thereto?
Ballot Language for Proposition A:
The issuance of $1,010,000,000 pension obligation bonds for the purpose of funding a portion of the unfunded liability of the City with respect to the Houston Police Officers' Pension System and the Houston Municipal Employees Pension System as contemplated by the pension reform plan contained in Senate Bill 2190 (adopted in the 85th (2017) Texas Legislature, Regular Session), and the levying of taxes sufficient for the payment thereof and interest thereon
.
A vote "For" Proposition A means the City can issue the pension obligation bonds to fund a portion of the unfunded pension liability for police and municipal workers.
A vote "Against" Proposition A means the City cannot issue the pension obligations bonds to fund a portion of the unfunded pension liability for police and municipal workers.
Capital Improvement Plan (CIP)
This July, City Council approved the City of Houston Fiscal Year 2018-2022 Capital Improvement Plan (CIP). The CIP is the five-year rolling plan of projected City infrastructure improvement projects, and is updated annually to address Houston's changing needs and priorities. The existing approved CIP allocates funds for improvements for parks, libraries, and the police and fire departments, as well as improvements that support health, solid waste management, and general City services.
Fully funding these programs for Fiscal Years 2018-2022 requires the City to issue public improvement bonds in the amount of $495 million. The issuance of these bonds is contingent on the outcome of ballot Propositions B-E.
City of Houston, Proposition B[4]
Shall the City Council of the City of Houston, Texas, be authorized to issue bonds of the City, which may be called City of Houston, Texas, Public Improvement Bonds in the amount of $159,000,000, maturing serially or otherwise at such times as may be fixed by the City Council, not to exceed 40 years from their date or dates and bearing interest at any rate or rates, either fixed, variable or floating, according to any clearly stated formula, calculation or method, not exceeding the maximum interest rate now or hereafter authorized by law, and to sell said bonds at any price or prices, all as shall be determined within the discretion of the City Council at the time of issuance, and to levy a tax upon all taxable property in the City annually sufficient to pay the principal of and interest on the bonds (together with any bonds that may be issued to refund the bonds) as it accrues or accretes, and to provide a sinking fund for the payment of the principal of the bonds (together with any bonds that may be issued to refund the bonds) as they mature, as well as all payments under any credit agreements, such tax to be levied without being limited by any provisions of the City's home rule charter limiting or otherwise restricting the City's combined ad valorem tax rates or combined revenues from all City operations, for the purpose of the acquisition, construction, rehabilitation and equipping of public safety permanent improvements for or benefiting the police and fire departments and department facilities, which may include joint facilities with other political subdivisions, the acquisition of lands and rights-of-way for any such improvements and for other public safety purposes of such departments, and all matters necessary or incidental thereto?
Ballot Language for Proposition B:
The issuance of $159,000,000 public safety improvement bonds for the acquisition, construction, rehabilitation and equipment of public safety permanent improvements for the police and fire departments and the levying of taxes sufficient for the payment thereof and interest thereon.
A vote "For" Proposition B means the City can issue the public safety improvement bonds in order to make public safety permanent improvements, such as fleet replacement needs for the fire and police departments, among other things.
A vote "Against" Proposition B means the City cannot issue the public safety improvement bonds in order to make public safety permanent improvements, such as fleet replacement needs for the fire and police departments, among other things.
City of Houston Proposition C[5]
Shall the City Council of the City of Houston, Texas, be authorized to issue bonds of the City, which may be called City of Houston, Texas, Public Improvement Bonds in the amount of $104,000,000, maturing serially or otherwise at such times as may be fixed by the City Council, not to exceed 40 years from their date or dates and bearing interest at any rate or rates, either fixed, variable or floating, according to any clearly stated formula, calculation or method, not exceeding the maximum interest rate now or hereafter authorized by law, and to sell said bonds at any price or prices, all as shall be determined within the discretion of the City Council at the time of issuance, and to levy a tax upon all taxable property in the City annually sufficient to pay the principal of and interest on the bonds (together with any bonds that may be issued to refund the bonds) as it accrues or accretes, and to provide a sinking fund for the payment of the principal of the bonds (together with any bonds that may be issued to refund the bonds) as they mature, as well as all payments under any credit agreements, such tax to be levied without being limited by any provisions of the City's home rule charter limiting or otherwise restricting the City's combined ad valorem tax rates or combined revenues from all City operations, for the purpose of the conservation, improvement, acquisition, construction and equipment of neighborhood parks, recreational facilities and bayous, including such green spaces along all bayous to create an integrated system of bayou walking, running, and bicycle trails, which includes the acquisition of land, conservation easements and rights-of-way for the enhancement, preservation and protection of the health of its citizens, water quality, natural habitat and native wildlife, and which may include joint facilities and/or improvements with other political subdivisions that are owned by or benefit the City, and all matters necessary or incidental thereto?
Ballot Language for Proposition C:
The issuance of $104,000,000 park improvement bonds for the conservation, improvement, acquisition, construction and equipment of neighborhood parks, recreational facilities and bayous, including such green spaces along all bayous to create an integrated system of bayou walking, running and bicycle trails to enhance, preserve and protect the health of citizens, water quality, natural habitat and native wildlife and the levying of taxes sufficient for the payment thereof and interest thereon.
A vote "For" Proposition C means the City can issue the park improvement bonds in order to make improvements to neighborhood parks, recreational facilities, and bayous, such as construction of the new Alief Multi-Service Center, among other things.
A vote "Against" Proposition C means the City cannot issue the park improvement bonds in order to make improvements to neighborhood parks, recreational facilities, and bayous, such as construction of the new Alief Multi-Service Center, among other things.
City of Houston, Proposition D[6]
Shall the City Council of the City of Houston, Texas, be authorized to issue bonds of the City, which may be called City of Houston, Texas, Public Improvement Bonds in the amount of $109,000,000, maturing serially or otherwise at such times as may be fixed by the City Council, not to exceed 40 years from their date or dates and bearing interest at any rate or rates, either fixed, variable or floating, according to any clearly stated formula, calculation or method, not exceeding the maximum interest rate now or hereafter authorized by law, and to sell said bonds at any price or prices, all as shall be determined within the discretion of the City Council at the time of issuance, and to levy a tax upon all taxable property in the City annually sufficient to pay the principal of and interest on the bonds (together with any bonds that may be issued to refund the bonds) as it accrues or accretes, and to provide a sinking fund for the payment of the principal of the bonds (together with any bonds that may be issued to refund the bonds) as they mature, as well as all payments under any credit agreements, such tax to be levied without being limited by any provisions of the City's home rule charter limiting or otherwise restricting the City's combined ad valorem tax rates or combined revenues from all City operations, for the purpose of the acquisition, construction, rehabilitation, remediation and equipment of permanent public improvements owned and operated by the City that support public health and wellness, sanitation and other essential governmental and general services of the City, which may include joint facilities with other political subdivisions, and acquiring lands and rights-of-way for such permanent improvements, and all matters necessary or incidental hereto?
Ballot Language for Proposition D:
The issuance of $109,000,000 public facility improvement bonds for the acquisition, construction, rehabilitation, remediation and equipment of permanent improvements that support public health and wellness, sanitation and other essential governmental and general services of the City and the levying of taxes sufficient for the payment thereof and interest thereon.
A vote "For" Proposition D means the City can issue the public facility improvement bonds in order to make permanent improvements that support public health and wellness, sanitization, and other essential and governmental services, such as renovation of the Denver Harbor Multi-Service Center, among other things.
A vote "Against" Proposition D means the City cannot issue the public facility improvement bonds in order to make permanent improvements that support public health and wellness, sanitization, and other essential and governmental services, such as renovation of the Denver Harbor Multi-Service Center, among other things.
City of Houston, Proposition E[7]
Shall the City Council of the City of Houston, Texas, be authorized to issue bonds of the City, which may be called City of Houston, Texas, Public Improvement Bonds in the amount of $123,000,000, maturing serially or otherwise at such times as may be fixed by the City Council, not to exceed 40 years from their date or dates and bearing interest at any rate or rates, either fixed, variable or floating, according to any clearly stated formula, calculation or method, not exceeding the maximum interest rate now or hereafter authorized by law, and to sell said bonds at any price or prices, all as shall be determined within the discretion of the City Council at the time of issuance, and to levy a tax upon all taxable property in the City annually sufficient to pay the principal of and interest on the bonds (together with any bonds that may be issued to refund the bonds) as it accrues or accretes, and to provide a sinking fund for the payment of the principal of the bonds (together with any bonds that may be issued to refund the bonds) as they mature, as well as all payments under any credit agreements, such tax to be levied without being limited by any provisions of the City's home rule charter limiting or otherwise restricting the City's combined ad valorem tax rates or combined revenues from all City operations, for the purpose of the acquisition, construction, rehabilitation and equipping the public library system, which may include joint facilities with other political subdivisions, the acquisition of lands and rights-of-way for such improvements and all matters necessary or incidental thereto?
Ballot Language for Proposition E:
The issuance of $123,000,000 library improvement bonds for the acquisition, construction, rehabilitation and equipment of the public library system and the levying of taxes sufficient for the payment thereof and interest thereon.
A vote "For" Proposition E means the City can issue the library improvement bonds in order to improve the public library system.
A vote "Against" Proposition E means the City cannot issue the library improvement bonds in order to improve the public library system.
Election Day polls are open from 7:00 a.m. to 7:00 p.m. Early Voting polling locations may be different from Election Day polling sites, so make sure to visit the
Harris County Clerk's Office website
to find your polling place for Early Voting polling locations as well as Election Day polling locations.
[1] A sixth municipal proposition (Proposition F) will also appear on the local option ballot for registered voters residing in the area formerly known as the City of Houston Heights. Proposition F asks for a vote for or against the legal sale of mixed beverages.
[2] The ballot will include Houston Independent School District Trustees.
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