TCR Comment: Bob Lemer, retired partner of Ernst & Young LLP, describes our potential coming nightmare in an article you will find in this edition. With a Houston Mayor's election this November, we hope the candidates discuss the fiscal crisis facing Houston and their ideas for solutions. The voters should elect someone who faces up to the problems and has solutions to them.
U.S. Senators Ted Cruz and Marco Rubio, and others are advocating that a coming fall debate on a short-term spending plan can be used to defund the failed ObamaCare program.
Good idea? Yes. IF we can communicate that our goal is not to shut down government but to defund ObamaCare, which has already been proven a fiasco. If he disagrees by refusing to sign the spending plan, Obama would be shutting down the government, not the GOP.
Let's review the bad things that have or will occur:
- Health insurance costs are rising by an average of $2,500 per person since ObamaCare was passed;
- Small businesses are laying off or cutting employees to "part-time" to avoid the Obama mandate;
- Union leaders, who have seen the drop occurring in Americans forced from full to part-time employment in order for employers to avoid Obama mandates, are down on ObamaCare;
- The latest WSJ/NBC News poll shows only 34% believe ObamaCare is a good idea.
Obama Administration Ignores Supreme Court And Threatens Texas
Just weeks after the U.S. Supreme Court struck down the pre-clearance requisites in the Voting Rights Act as unconstitutional; Attorney General Eric Holder is seeking to force Texas to continue to get permission to change its election laws.
It's instructive to review the reasoning for Mr. Holder. First, he says Texas engages in intentional voter discrimination. Second, to prove it he says there was intentional racial discrimination in the redistricting done last legislative session. But anyone who follows redistricting knows what motivates the party in charge is ideology and party loyalty, not race. Third, he cites the voter identification requirements, which are just common sense. The critics say it costs the poor, mostly affecting African Americans or Hispanics, to get the ID. Of course, the bill does allow various forms of ID.
TCR Idea: Maybe we should require photos on our voter registration card, just like it is on our driver's license? Would the Democrats complain? Yep.
One Additional Note: There Is A Political Side Of The Voting Rights Push By Democrats
Josh Kraushaar in the National Journal on July 30, 2013 uncovered what really motivates the Democrats.
"To hold onto the Senate and to win some key battleground House seats, Democrats badly need to get African-American and Hispanic voters to turn out in higher numbers than usual for a midterm election."
Wendy Davis: Out Of Step With America?
"Without a driving issue to get minority voters to turn out, it's hard to see them showing up for moderate Democratic senators or challengers. But as President Obama's 2012 reelection campaign showed, voting-rights issues can be a powerful motivational tool-and with new get-out-the-vote technology, Democrats are cautiously optimistic they can beat the odds."
We are wondering, while State Senator Wendy Davis (D - Ft. Worth) is the new heroine of the Left in America, whether she realizes only 27% of Americans opposed banning abortion after 20 weeks of pregnancy?
So clearly, on this issue, Davis and the Left are a small minority and out of touch.
Pied Piper of Houston
By Bob Lemer, Guest Contributor
Matthew Kaminski's "Weekend Interview, The Modern America Boomtown" (Wall Street Journal) is only the most recent example of the mesmerized media unwittingly falling in behind the Pied Piper of Houston, mayor Annise Parker, and thus aiding her in taking the City ever closer to the dark forest of a Chapter 9 bankruptcy.
The music of her flute is the conscious confusion between the strong ECONOMY of the Houston REGION and the disastrous FISCAL CONDITION of the HOUSTON CITY GOVERNMENT.
But unlike the poor children of Hamelin, with a new focus on reality, transparency and honesty, and a new mayor to tell the truth to our voters, Houston can be saved.
I have initiated rescue efforts by sending an intervention disclosure plea to the SEC, with copies to the Texas attorney general and the three municipal bond rating agencies.
The media touts Houston as the current star performer in the country's economy. So am I daft? No.
It is true that the Greater Houston Area is leading the country in economic growth.
However, the Houston city government itself has reached and passed its financial tipping point.
Here is proof of that unfortunate reality, primarily from (a) the City's audited financial statements and other data in its 2012 Comprehensive Annual Financial Report (CAFR), (b) its monthly financial and operating statements, and (c) its preliminary budget for fiscal year ending June 30, 2014:
- The City has not balanced its budget on an accrual basis of accounting since 2002, and since had operating losses totaling $2.4 billion for fiscal years 2003-2012.
- $1.5 billion of such losses occurred before the Great Recession hit Houston in 2008.
- The losses occurred even though the City had record tax revenues in fiscal years 2003-2009.
- The losses were primarily due to totally unsustainable increases in pension plan benefits.
- But even when excluding pension costs, the City's operating expenses continue growing today at a rate exceeding the growth rate in revenues. Thus the City still has a structural problem in expenses rather than in revenues.
- Houston's $2.4 billion in operating losses for fiscal years 2003-2012 exceeded those of:
- The other 9 of Texas' 10 largest cities-combined.
- Each of the other Sun Belt cities.
- City of Detroit.
- The City's current population is significantly less than in 2010, according to the US Census Bureau, although it has gained slightly in the past year. The employment level within the city limits has also fallen in recent years.
- The City government's own workforce (civilian, police and fire-each) is bloated and top heavy; and approximately 1,200 employees are in in pay grades with over $100,000 annual base pay allowable.
In February 2012, a city council authorized task force advised that, under every considered scenario, the City's general fund would run out of cash in fiscal year 2014 and would have run out of cash several years prior had the City not issued over $600 million in back loaded pension plan bonds.
The City temporarily delayed the inevitable evaporation of the general fund balance through fire sales on City assets and some dubious transfers from other funds, including the water and sewer fund (suddenly flush from new rapacious water and sewer rates) and a recently created and supposedly sacred drainage fund ("rain tax").
But even with the benefit of these dubious transfers continuing, the fiscal 2014 preliminary budget shows that by the end of fiscal 2014 the unrestricted general fund balance will dissipate to the equivalent of only about 24 average calendar days of expenses and debt service. So time, as well as cash, is indeed running out quickly.
The consequences of this fiscal collapse are beginning to show and affect everyday life. Most visible and troublesome is deterioration of our streets and our drainage infrastructure.
After investing several billion dollars in infrastructure in the last 10 years, the City's water supply system has not gained any capacity and many streets are in abysmal condition. According to the "2012 Report Card For Houston Area Infrastructure" issued by the American Society of Civil Engineers (ASCE), the Houston area received the following overall grades: bridges C-; drinking water D; flood control and drainage C-; rail C+; roads and highways D+; solid waste C; transit C-; and wastewater A. Overall, this is greatly unacceptable, in my view.
Mayor Parker was in unique watchdog positions during the deterioration of the City's finances and infrastructure: (a) city council member (including chair of city council budget and fiscal affairs committee), calendar years 1998-2003; (b) city controller, 2004-2009; and (c) mayor, 2010-2013. Yet she offered no significant warnings of the building financial and infrastructure disasters.
Mayor Parker touts the great diversity of Houston's population, but she has shown little grasp of the changes in the economic demographics brought about by this growing diversity and certainly not how Houston's economy can be jump started to pay for the new economic demographics.
When Ms. Parker touts Houston's diversity and her passion for individual rights I cannot help but recall my 2002 visit with her and then-mayor Lee Brown's chief of staff. We were discussing the concept of changing the city charter to require voter approval before the City could increase spending for any given year at a rate exceeding the combined growth in population and inflation.
Her exact words to me were, "I don't know how much democracy I believe in." She went on to explain that the average citizen doesn't understand enough about the City's finances to vote on even how much the City's total spending should be. My response was then, "How can a voter be savvy enough to determine which candidate would know the answer?" She had no response.
Regarding growing the Houston economy to cover the demands of growing diversity and reversing the decrease in population and jobs, I cannot recall when the City of Houston (as opposed to its MSA) last won the relocation of a major employer. But I do know Houston is stinging from the recent losses of such giants as Continental (United) Airlines and Exxon Mobil (to The Woodlands, outside the city limits).
I am convinced that the City's economy, finances and infrastructure cannot be turned around by the Pollyannaish leadership of our current Pied Piper of Houston mayor.
Houston needs a strong "can do" visionary mayor like those who built this great city in the first place. The first step is to recognize reality and tell the truth.
Bob Lemer, Chairman of Citizens for Public Accountability, a bipartisan taxpayer advocacy group of retired partners of some of Houston's accounting firms.
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About Your Editor
Gary Polland is a long-time conservative and Republican spokesman, fund-raiser, and leader who completed three terms as the Harris County Republican Chairman. During his three terms, Gary was described as the most successful county Chairman in America by Human Events - The National Conservative Weekly. He is in his fifteenth year of editing a newsletter dealing with key conservative and Republican issues. The last twelve years he has edited Texas Conservative Review. As a public service for the last 10 years, Gary has published election guides for the GOP primary, general elections and city elections, all with the purpose of assisting conservative candidates. Gary is also in his eleventh year of co-hosting Red, White and Blue on PBS Houston. Gary is a practicing attorney and strategic consultant. He can be reached at (713) 621-6335.