By Stephen Young
By Stephen Young
By Stephen Young
By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
First, we all change our names. Then we wait until very late at night, and we poke just our noses and one eye out through the curtains, and we look up and down the block, up and down the block. THEN WE RUN OUT AND THROW SOME STUFF IN THE CAR AND MOVE TO OHIO!
No, no, wait. That would be irresponsible. It's not so bad. Here's what it is. They forgot to put some money in the city employees pension fund. Just forgot. Bizzy, bizzy, bizzy. How much? Some money. Just think of it that way: some money.
It's $556 million! RUN FOR OHIO! LEARN FOREIGN ACCENTS! "I am surry, we are never hearink of this Dallitz town."
OK, let's calm down. It's not like it's $556 million that you and I have to pay right now. That number is the total amount the plan will be short over the next 30 years if nothing gets fixed. The amount it's short right away is much less. They'll let us make a payment. All we have to pay right now is...$20 million!
Let me just breathe here for a second, and then I'll break it down for you. Where to begin? You will recall that back in the late 1990s, former Mayor Ron Kirk, whose lovely and capable wife, Matrice, earned $500,000 by attending board meetings at a company owned by financier Tom Hicks, teamed up with then-City Manager John Ware, who eventually left city service to work for Mr. Hicks on "deals." Together, Kirk and Ware very effectively sold the idea that the city should give Hicks a $125 million taxpayer subsidy for the new sports arena that he and Ross Perot Jr. were building at the time.
And let me just pause and point out something very important: At no time was anything nasty ever proven about the mayor's wife getting hundreds of thousands of dollars from Hicks or about the Dallas city manager going to work for him right after dishing him $125 million of our money. So let's not hear a bunch of innuendo about it, OK?
RUN! RUN FOR OHIO! No, wait, I am so genuinely sorry--that just popped out. I have no idea why. You will recall, I am sure, that Kirk and Ware both assured us at the time that we could afford to flip Hicks 125 big ones, no sweat, without any kind of a tax increase or possible harm to our bond ratings.
Our credit rating at the time on bonds was almost the very best you could get, AAA+, and there was some concern it might be downwardly adjusted to STUPID++. (In fact, it's now AA.) The bond rating agencies look at the total value of taxable property and the total amount of the city's obligations to see how much ability the city has to pay off debt.
A key element in the sales pitch for the arena was the notion that the arena would be paid for with "new money" from auto rental and other "new taxes" and therefore would have no effect on the bond rating. The pension fund issue, by the same token, was dismissed as unrelated, since the pension fund is paid from other revenues.
It's not an argument that washes with one of the key experts who mediated the city's actuarial problems in the late '90s. Leonard R. Cargill Jr., an actuary who sits on the Texas Pension Review Board, says a thorough public debate on the arena subsidy--and on any other major expenditures the city was considering at the time--should have included a candid and thorough airing of the problems with the pension fund.
Cargill thinks it's misleading to speak as if major public obligations have no relation to each other. The ability of a local economy to generate tax revenues is not infinite, he says, and at least in theory, if you can use a new tax to give money away, you also could have used it to pay your debts and reduce other tax burdens.
"We're looking at huge pension increased costs," Cargill says. "City property taxes are going through the roof." Any new source of revenue could somehow be used to reduce the taxpayer's existing burden rather than giving the money away.
Randy Stalnaker, a member of the Dallas pension board, points out that the city's bond prospectus now includes a description of its efforts to solve the pension-fund underfunding issue. He takes that as proof that bond underwriters care about pension funds.
But Ware and Kirk managed to keep most of this out of public view when they were selling the arena deal and the Trinity River improvement plan to voters. Beginning in 1996, Ware had engaged in a long battle to silence members of the employee pension fund board and a new actuarial firm auditing the fund, which was warning that the pension fund didn't have enough money. Ware even demanded unsuccessfully that members of the board resign, and he tried to bring in new actuaries. He insisted the city should rely on the word of its former actuaries, who had always said everything was up to snuff.