AFP Testifies on Public Pension Reform
Peggy Venable, Texas Director, Americans for Prosperity
Testimony before the
Pensions, Investments & Financial Services Committee
September 12, 2012
Interim charge: Review local retirement systems that are not a part of statewide systems, the administration of these retirement systems, and current liabilities. Study and make recommendations aimed at curbing rising pension costs to local governments.
Review the Texas County and District Retirement System and the Texas Municipal Retirement System and examine plan provisions offered to individual participating counties and cities.
Americans for Prosperity activists in Texas number over 120,000 and we have been focused our attention on local government debt and long-term obligations of local government entities.
Texas local governments are a total of $322 billion in debt according to the latest figures available from the Texas Bond Review Board. This includes principal plus interest, with interest accounting for approximately 40% of that total debt figure.
We are concerned that citizens – and many local officials – are unaware of their local taxing entity’s debt. One Round Rock ISD board member, in discussing a possible bond initiative, was asked how much debt the district is currently carrying. She answered that she was ashamed to say she did not know. (RRISD is carrying a debt of approximately $1.1 billion.) She should be ashamed, but many local officials could not answer that same question.
Not only are taxpayers often unaware of the debt but they are not informed of the interest they will be paying on bond initiatives being proposed.
Texas is second in the country in the amount of local government debt we carry – second only to California (The “Greece of America”).
Texas also continues to create new local taxing entities. According to the Comptroller, the number of local property tax entities has grown 45% since 1992 and the number of sales tax entities has grown 1,900% since 1993!
We believe that we need greater transparency in local government finances. Taxpayers deserve to know what liabilities their local governments carry. The debt reflects today’s spending projects which we are obligating future generations to pay. We are leaving young Texans with a legacy of debt, not the legacy most of us would want to leave our children and grandchildren.
While public pensions are in part funded by the public employee, the public also carries obligation. We applaud your work to review the various public pension programs in Texas and both promote greater transparency in the pension plans as well as reform pensions which are currently “defined benefits” and move to what the private sector has done and use the “defined contribution” model.