Nov 3 (Reuters) - Houston voters on Tuesday will determine the fate of a $1 billion pension bond issue, which is the last piece of a state-approved plan to fix the city’s financially ailing retirement systems.
The bond measure is one of 370 debt issues totaling $24.5 billion on ballots in 26 U.S. states next week, according to data company Ipreo.
Passage of the bond issue is a critical part of a 30-year cost-saving plan signed into law in May by Texas Governor Greg Abbott to address Houston’s $8.2 billion unfunded pension liability.
Mayor Sylvester Turner on Wednesday urged voters to support the pension bonds.
“For the first time in 17 years, we now are on the verge of coming up completely with a pension solution,” Turner told reporters.
Chris Brown, the city’s controller, said voter rejection of the bonds would rescind $1.8 billion in savings and would force Houston to come up with an additional $150 million in its next budget to comply with mandated pension payments at required levels.
The nation’s fourth-largest city is still recovering from the late August destruction from Hurricane Harvey, which left the city scrambling for every dollar it can find, Brown said.
“We like to say we’ve already endured a natural disaster so we sure don’t want to create another financial disaster on top of the natural disaster we just experienced,” he said.
Proceeds from the bonds would flow mainly to the city’s police pension fund, which would receive $750 million, and to the municipal employees’ fund, which would get $250 million.
The Houston Police Officers’ Union agreed to reduced pension benefits and is supporting the bonds to save the police pension fund, according to Ray Hunt, its president.
“The money is going to be paid. The question is if the money is going to be paid through bonds or is it going to be paid through layoffs,” he said.
Brown said he is unaware of any organized opposition to the bond measure, which faces the prospect of low voter turnout. If approved, he said the taxable debt would be priced in December through underwriting firms Barclays and Jefferies.
Of the states holding bond elections on Tuesday, Texas has the most issues at 112 totaling $11.67 billion, including $1.05 billion of bonds for Austin’s public school system, according to Ipreo.
Houston has another $495 million of bonds in four issues on the ballot for public safety, parks, library and other projects. Dallas voters will decide 10 bond issues totaling just over $1 billion for various capital improvements.
In Arizona, voters will consider more than $1 billion of bond deals to fund school and transportation projects.
Voters in the city and county of Denver will decide on more than $900 million of general obligation bonds in seven measures. The largest is $431 million of bonds for transportation projects.
“I’m assuming we would go to the market in terms of a financial transaction to draw down on these funds probably in the latter part of the first quarter, into the second quarter of next year,” said Brendan Hanlon, Denver’s chief financial officer. (Reporting by Karen Pierog in Chicago, additional reporting by Robin Respaut in San Francisco and Stephanie Kelly in New York; Editing by Daniel Bases and Matthew Lewis)