Pension Crisis: Fort Worth Employees vs. Taxpayers
Fort Worth is in a pension crisis, which in turn has the city looking at raising property taxes significantly this year. The pension crisis is at the heart of the proposed increase in property taxes. It would be an increase of over 2.8% this year compared to the prior year. However if your property had an increase in appraisal you’d see a compounded increase of that amount plus the tax increase. For instance if your property appraised for 10% more this year, you’d have a net increase of 12.8% (appraisal plus tax increase).
Like many other cities in Texas, their pension plans are facing unfunded liability issues. This shouldn’t surprise anyone because pensions are not good. If you look at any private company you’ll see that defined benefit plans are being phased out, being replaced by defined contribution plans. Right now Fort Worth pays 19.74% of the general and fire employee’s salary, and 20.46% of police employee’s salary into the pension fund. The employees contribute 8.25% and 8.73% of their salary into the pension fund. However to stop the funding crisis, with the pension, the city is proposing some changes to contributions.
The city needs to cover a 10.5% pay gap in the fund annually to correct the unfunded liability. To do this the city is proposing to raise its contributions an additional 3% and the employees contributions by 2.3%. They will also make some cost of living adjustments and other benefit changes to make up the remaining short fall.
The city of Fort Worth employees are not having any of this apparently. They are already threatening to vote down any increase in their contributions, as well as voicing major opposition to any changes in benefits. Some have gone as far as to scare residents, they claim police officers will quit and no one would ever hire on with the city because of these changes. This is a flat our scare tactic to try and get their way.
The last time the city increased its contributions to the fund was in 2010 when they increased by 4%. The last time the employee’s increased their contribution was way back in 1999. They also only increased their contributions by 1.3%. For far too long the citizens of Fort Worth have had to shoulder the burden of this pension while the employees of the city did not.
To the claim that police officers would quit because of this benefit, I don’t know where they would go. Looking at cities around Fort Worth and comparing pension benefits, opened my eyes to how much the citizens of Fort Worth are getting ripped off. Cities such as Arlington, Southlake, Denton, Euless and many others use a system called TMRS (Texas Municipal Retirement System). In this system the employees contribute 7% of their income and the city does a 2x match, or 14%. It looks to me like the employees of Fort Worth know that they have it really good and don’t want to lose their cash cow.
I think its time the city council stood up to the employees instead of coming back to the citizens of Fort Worth for more money.