America's affordable global city and Big 7 metros, Dallas envy, pensions, and moreApologies for not being able to get a post out last week, which means even more items have stacked up for this week. Traveling next week as well, so there may not be a post then.
First, a random thought I had recently on a distinctive positioning for Houston: America's affordable global city (as opposed to NYC, LA, SF). We have a global diversity not found in other affordable big metros like DFW and Atlanta, including significant populations from Asia, Africa, Latin America, and even Europe (welcome to the global energy industry). I think our closest competitor under that distinction would be Chicago, although they are a bit more expensive and are facing an extremely serious financial situation. America's affordable global sunbelt city? America's affordable global non-bankrupt city? ;-) Curious to hear your thoughts in the comments.
- Speaking of finances, Chicago is a big red warning flag for Houston: Beneath Chicago’s Gloss: How it is possible for a city this booming to be this broke?
- Scott Beyer in Forbes on Houston's pension crisis. Excerpts:
"If urban American governance has long been a cesspool for machine politics, then Houston, with its light regulation and pro-growth mentality, has been perceived as the exception. But it turns out that for at least one issue, Clutch City mirrors the rest. A recent report by the Laura and John Arnold Foundation, a local research-oriented philanthropy, found that Houston suffers from a growing public employee pension crisis that could soon make it just another debt-saddled U.S. city.
The real culprit is that the retirement benefits themselves are too large, and the path to reform elusive. The under-funding problem for pensions began during the mayoralty of Lee Brown, right after changes were made in 2001 to increase pensions for public employees, in some cases doubling them for top officials. The system has since run deficits, including over $50 million last year. And this system is hard to reform because it is protected by state statue, making it legally difficult to alter benefits. So what Houston residents and officials must do instead is either cut basic services, raise taxes, or both.
Of course, the other option is for Houston to do neither, and just continue underfunding its pension system. But this strategy doesn’t seem to work out in the long run. Unfunded retirement liabilities were the main cause of default and bankruptcy in Stockton, Detroit and Puerto Rico; and have led to massive debts in other cities–$40 billion in Los Angeles, $46 billion in New York City, and nearly $60 billion in Chicago.
The Arnold Foundation report noted that Houston’s current position is similar to Chicago’s in 2003, when the Windy City’s annual required retirement system contribution equaled one-fifth of its general tax revenue. When tax receipts dropped because of the recession, the unfunded retirement crisis worsened, and now Chicago has suffered from multiple downgrades, with the Illinois governor even seeking a legal route to bankruptcy. Houston’s debts are still mild compared to these other long-mismanaged cities, but hopefully they are addressed–aka cut–before they, too, create a fiscal emergency."
Time to get serious folks, and I'm glad to see the GHP, Chronicle, and several of the mayoral candidates (especially Bill King) really focused on solving this issue before it gets unsolvable.
- Speaking of fiscal nightmares, the planned bullet train for California will not only cost many tens of billions, but even after construction is unlikely to be able to cover its operational costs from fares! California is entering quite the fiscal black hole. One just has to hope the feds don't bail them out with our tax dollars...
- A columnist at the Dallas Observer gets Houston envy, superficially for our Buffalo Bayou park project, but really for our strong mayor system of government, which I wholeheartedly agree is better than a city manager form of government. Strong mayors can really get things done.
- A transit future to beware, Houston. Just makes your stomach turn. Will Hurling More Money At The MTA Improve New York City's Transit?
- Texas Passes California as Top State in Volume of Wholesale Trade Sales. Hat tip to Gary.
- A nice shout-out from blogHouston on a couple of my Kinder Institute critiques. Thanks Kevin!
- A really cool cluster profile of Houston (and the rest of the country's major regions).
- The GHP has updated their Houston fact sheet, which always has a wealth of enlightening tidbits to make your proud of our city.
- I have to say, I found it slightly amusing to read this breathless NYT profile of Nashville's high growth while noting that it takes them a decade+ to add as many new people as we're adding every year!