Rice professor: Houston has $10B pension problem

Houston’s pension problems could be much, much bigger than most people suspect.

Earlier this year – under the cover of New Year’s Eve – the city of Houston released a new report that pegged the city’s pension liabilities at $5.6 billion in FY 2015, billions more than in the previous fiscal year. The spike in liabilities is due, in part, to more accurate accounting standards.

But even a $5.6 billion hole may be greatly understating Houston’s pension problems.

According to Rice University Adjunct Professor John Diamond, Houston’s pension funds are using “optimistic assumptions” to determine their net fiscal positions, and that is helping to downplay the problem. Applying more reasonable assumptions, according to Professor Diamond, reveals that Houston’s pension problems could be as gigantic as $10 billion! That could mean big tax increases, reduced benefits, or some combination of both are on the horizon in Houston.

Watch the full interview below.

Source: KPRC Click2Houston