How Much Will Proposition B Cost?

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I have had a number of people ask me if I could tell how much it will cost the City if Proposition B passes.   It is not an easy thing to sort out because the cost could vary significantly based on exactly how it would be implemented.

For example, the proposition would put police and fire on an equal footing in qualifying for education and training incentives.  The City has estimated this will cost $10 million annually.  But even The City’s own notes on its analysis indicate this is not much more than a guess since there is no way to know how many fire fighters would qualify for the benefit or take advantage of it.

But I have been able to pull together some data from various sources and I think the likely cost is coming into better focus.  Based on this most recent information, I would put the cost of the Proposition B at something in $70-80 million range.  If that is correct, it will be an increase in total compensation of 15-18%.

As you have probably heard, the City and its surrogates have been trumpeting from the roof tops that Proposition B represents a 25% pay increase and will cost $98 million annually.  Some more recent estimates have said it is 32% and will cost “over $100 million” annually.  These estimates are clearly exaggerated.

The most recent analysis was done by City Controller Chris Brown’s office.  He has estimated the annual cost at $85 million.  This, I think, represents the most comprehensive and objective analysis we have seen so far.  I would take one relatively minor exception to Brown’s analysis.  He includes an increased pension cost of $16 million, which he calculated at the current contribution rate of 33%.  However, 19% of that 33% is going to pay off the unfunded liability.  Only 14% is ongoing cost of the pension plan, at least, according to the actuaries’ estimates.  So, 19% is not an increased expense, it just represents a faster repayment of the pension debt.  If you use 14% for the increased pension cost, Brown’s estimate would have come in at about $76 million.  [Click to review Controller’s Estimate]

My original guesstimate was based on PFM’s long-range financial study commissioned by the study.  PFM calculated the all-in personnel costs at $124,000 for police and $104,000 for fire.  So, if you brought fire up to exactly the same cost as police that would be about $20,000 per employee.  That would be $80 million total or a 17.5% increase in total compensation costs.  But, as Brown’s analysis shows, a large portion of the difference between police and fire is in the special category pay – for example, being bilingual.  There are several of these categories, like investigative pay, that will be much smaller in the fire department than the police department.  So, I my guess is that the $80 million was the upper limit on the cost.

The other indication that $70-80 million is in the right range is that Turner originally said that the finance department had estimated the cost at $238 million over three years – or $79 million annually.  It was only after the finance department was sent back to massage the numbers that they came up with the higher estimate.

The City has never publicly disclosed the basis of its $98 million cost, but the Houston Chronicle obtained a worksheet through an Open Records request.  [Click to see City Estimate]  It estimates the pension cost at $22 million, which also, inappropriately in my opinion, includes the legacy cost of paying down the unfunded liability.  If you make that adjustment alone, it gets the City’s estimate down to about $86 million.

So, all of these numbers seem to be converging on $70-80 million/15-18% range.  I would suggest to voters that when they think about how they will vote on Proposition B, this is the range they should assume.

The fire fighters have gotten a 4% total raise since 2011.  This would take them up to a 19%-22% raise in eight years, or about 2.5% annually.   According to a story by Mike Morris, the police have gotten a 30% raise over the same period and are slated to receive another 9% in the next three years.

I am not crazy about the idea of writing compensation matters into the city charter.  And catching the fire fighters up to a 2.5% annual raise in one jump is going to be a hit to the general fund budget that will take some significant belt-tightening to be sure.  But the City’s general fund revenues are up by $80 million last year and the City seems to always find whatever money it needs for its pet projects, like the $200 million it is spending on the idiotic bus lanes on Post Oak.

I think it is entirely possible that Turner will lay off some fire fighters in retaliation as part of his on-going war on the fire fighters if Proposition B passes.  But the calamitous predictions about massive layoffs, tax increases and other severe reductions in service are so much hyperbole.

  • John OLoughlin
    Posted at 16:44h, 22 October Reply

    Pay parity between the two departments is a joke. Job similarity between HPD and HFD is simply not there. I see HFD folks washing fir trucks, playing tennis at CLCCA tennis courts, and taking a fire pumper to Krogers or HED everyday with 4 folks in it. They don’t need a gun like the HPD due to always threats by bad guys. Also, my understanding from earlier Mr. King comments that HFD has an ungodly generous pension much better than my wife who has a master’s degree in math and taught at the high school level for 40 years. Besides even thought the HFD likes to throw around that they are “fire fighters”, they are actually now days much more EMS providers.

  • Michael Flanagan
    Posted at 22:37h, 23 October Reply

    Where to start? The pay discrepancy is what is a joke, and a bad one at that. Both HFD and HPD are first responders. They show up, usually in around 6 minutes, on the worst day of your life, and try to make that situation better. Firefighters enter burning buildings to save the lives of you or your loved ones. They answered the call in August 2017, wading through the waters of Harvey to pull people out of harms way, side by side with HPD. And yet, you think they somehow are undeserving of equal pay? Despite working 15 percent more hours than HPD?

    Like Municipal and HPD, HFD had their pensions “reformed” in 2017, and that ungodly generous pension was halved. As far as your other comments — I’ve seen them running out of HEB leaving groceries in carts when a call comes in, since they are in service 24 hours a day. And exercising on duty or washing fire trucks — that’s what they are supposed to be doing.

    You may not value firefighters. You may think you have no need for their service I hope you are right. But if you, or your family, ever do, they will be there. What other city service can you call 24 hours a day and have someone show up at your door in minutes? HFD provides an invaluable service, and one I’m more than willing to pay for. I’m voting for Prop B. You should too.

  • Joie Thomas
    Posted at 12:03h, 31 October Reply

    I am from a smaller town which needs coverage in all it’s suburbs for Fire. A friend of mine worked for the firefighters and rotated around the different stations, some of which were on constant call out and some of which had very low activity. However, each needed coverage and the citizens demanded local fire stations for quick response when needed. When the population demands quick response for areas that have fewer calls, the firefighters will have more downtime. It’s a trade off for quick response (meaning more stations in lower fire demand areas) vs fewer stations that are farther away when fires occur in those areas. In areas of law enforcement and fire, the very nature of the business is being ready to immediately answer calls when demanded. If firefighters are on a call and a second major fire occurs, the citizens are complaining of poor service. It’s a balance. And finally, new suburbs demand fire stations. Generally these areas have few calls until the population density increases. Again, the citizens demand geographically close presence of police and fire. When my friend was posted at the slower stations, she was also giving fire safety assignments at the schools and such.

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