AUSTIN, Texas - Dallas Mayor Mike Rawlings said Thursday the Dallas Police and Fire Pension Fund crisis -- combined with another looming problem -- could potentially bankrupt the city.
Rawlings said a $4 billion hit from the pension system, combined with a possible $4 billion dollar judgment in a decades old lawsuit, could be too much for taxpayers to handle.
Fox 4 had the only news camera at the state capitol in Austin on Thursday as Rawlings revealed just how bad the pension crisis could be for the city of Dallas.
“A city that has made Texas so strong and so proud is potentially walking into the fan blades that might look like bankruptcy,” Rawlings told state leaders. “Shame on me. Shame on you. Shame on all of us if we allow that to happen."
The mayor argued that the state needs to give the city control over the pension fund. Right now, it is the members themselves who must approve their own benefit and contribution changes.
“I would suggest the fox guarding the hen house is a great metaphor,” Rawlings said. “It’s the reason why members have been able to so recklessly guarantee themselves 8 -10 percent returns through the DROP program. I would love to have someone guarantee me an eight percent return on my investments."
Pension fund members have recently been retiring with multi-million dollar drop accounts.
“This is much like a Bernie Madoff scheme if you ask me,” Rawlings said.
The mayor said the pension system has demanded the city to provide a $1 billion check in 2018. He says that would cost taxpayers a 130 percent property tax increase. But the mayor isn't yet providing any suggestions of his own.
“Is it possible to fix it without a taxpayer bailout?” FOX 4 Reporter Lori Brown asked Rawlings.
“I think there are several solutions. We're talking about it,” he replied. “What I'm trying to do is figure out what's already in that system that needs to change before we ask the taxpayers to come forward."
Mark Patterson, the director of the Texas Association of Public Employee Retirement Systems, says the mayor isn't doing enough.
“The mayor has to take the initiative to solve city problems,” he said. “If that means meeting with fund directly and arranging for staff to work with the fund, that needs to be done."
To solve the pension crisis will require Texas lawmakers to change state law. To do that, both sides need to show some agreement, something they did not show on Thursday.
“I'm somewhat disappointed at the level of discourse I'm hearing,” said Pension Review Board Chair Josh McGee. “We seem to be at a stalemate, and more of the discussion is around blame than taking responsibility and moving forward."