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As lawmakers try to fix city pensions, personal and business ties emerge

Several Texas lawmakers have personal or business ties to the Houston and Dallas pension systems, as the Legislature considers bills aimed at fixing both cities' pension problems.

Texas House Pensions Committee Chairman Dan Flynn, R-Canton, listens to testimony on April 3, 2017.

The Texas lawmaker championing a controversial House bill aimed at fixing Dallas’ beleaguered police and fire pension fund is also the father-in-law of a firefighter in that city.

But state Rep. Dan Flynn, R-Canton, is far from the only state lawmaker this session to find that bills tackling some of the country's most financially troubled pension systems intersect with their personal or business lives. And in a state with a broad definition of what constitutes a conflict of interest, each legislator gets to independently decide for themselves whether to recuse themselves from helping shape pension bills being considered this legislative session.

Flynn said the Dallas pension's dire financial conditions — and not the fact that his daughter married a Dallas firefighter less than three years ago — was his driving force in authoring the legislation. The bill aims to address the city's multibillion-dollar pension shortfall by overhauling the board, changing how and when some pension funds can be collected and increasing the amount of money the city and its public workers pay into it. Flynn said the personal relationship and his legislative work don't constitute a conflict of interest.

“That’s almost offensive that anybody would suggest that,” Flynn said from the House floor Thursday.

Flynn presided over an often-tense pensions committee hearing Monday during which Dallas officials and business leaders said his bill was written too heavily in favor of police and fire pension members.

“Anyone opposed to this bill is standing against the Dallas police and fire families,” Flynn said during his opening remarks.

Meanwhile, pension committee member Rep. Rafael Anchia, a Dallas Democrat, chose to skip the meeting entirely because his law firm counts the city's police and fire pension system among its clients. Anchia said he is not going to deliberate or vote on the bill because it specifically pertains to the Dallas retirement system and not pension funds in general.

"If there is even a remote possibility that the appearance of conflict can arise, I just want to avoid that altogether," he said. 

State Rep. Eric Johnson, D-Dallas, also plans to refrain from voting on the bill, a staffer confirmed Thursday. The reason was unclear. Johnson was unavailable for comment as House members debated that chamber's budget during a marathon session expected to last into Friday morning.

Dallas City Council member Scott Griggs, who also sits on the police and fire pension board, said he isn't familiar enough with state ethics rules to know what constitutes a conflict of interest.

"The Dallas police and fire pension crisis has pulled in many different groups, and it's a very complex entanglement of people and interests," he said.

State Sen. John Whitmire, D-Houston, previously said that he may avoid voting on some pension matters this session because he works for a law firm that counts Dallas and Houston pension systems among its clients. But Whitmire was the sole Senate Democrat last week to break party ranks and vote for a bill that would require voters to weigh in when a city wants to take on pension obligation bond debt – a bill aimed squarely at efforts to address Houston's pension troubles.

State lawmakers rarely recuse themselves from legislative votes because the definition of a conflict of interest is broad in Texas. Plus, there is no meaningful enforcement mechanism if existing rules are violated.

Lawmakers have previously lobbied their colleagues to reject proposed regulations for industries in which they work, authored bills that directly impacted their companies and cast votes on bills supported or opposed by their employers.

Greg Abbott was the first Texas governor in more than 20 years to make ethics reform a legislative priority two years ago. Lawmakers answered his call with some of the furthest reaching ethics reforms considered in years. But when the 2015 legislative session ended, about two dozen attempts to curb conflicts of interest and tighten ethics rules failed to become law. Lawmakers are trying again this session with a bill from state Sen. Van Taylor, R-Plano.

Dallas Mayor Mike Rawlings drew ire from his city's pension members this week for withdrawing his support for Flynn's bill. But on Thursday, Rawlings said he's still confident that a pension fix could be found before the session ends on May 29. And he said Flynn has shown no signs of siding with one faction over another.

"I don't know what a conflict is down there," Rawlings said of the state Capitol. 

A pending crisis

Scores of first responders on Monday testified in favor of the Dallas pension bill, which came after months of tenuous negotiations between pension officials, city leaders and legislative staffers. Many people wrestling over a fix — and those who would be affected by an eventual outcome — see a pending crisis on the horizon if Flynn’s bill doesn’t help shore up the shortfall. But what that crisis will be depends on whom you ask.

Many fear police and fire employees will leave Dallas in droves if they can’t depend on retirement benefits around which they’ve long built their lives. Dallas gained a net 33 fire employees in 2015 but lost that same number last year. So far this fiscal year, the city has lost a net 60 fire employees.

The police department had a net loss of 33 employees in 2015. That figure exceeded 150 employees last year. The department has so far lost a net 128 employees this fiscal year, which is about half over. Because the city budgeted for more police employees this year than last, there are currently about 400 positions not filled for which money was set aside.

Some first responders say those employee deficits could grow depending on the outcome of Flynn’s bill.

“What you're seeing now is the death of public safety in this city,” Dallas Police Retired Officers Association president Pete Bailey told The Texas Tribune last month. “It's breaking everybody's heart.”

Meanwhile, city leaders say Dallas could face bankruptcy or dramatic property tax increases if the unfunded liabilities aren’t covered.

“If we screw this up, we will jeopardize the future for the next 30 years,” Rawlings said at this week’s hearing.

Rawlings said he could not support the bill because it didn’t swing the balance of power on the pension board away from first responders to instead favor the city. The current version of the bill aims to split control between the two factions.

Rawlings also complained that the bill requires the city to continuously increase how much money it puts into the system to cover generous benefits that police and fire pension members previously approved for themselves.

“The citizens, the taxpayers had nothing to do with the failure of this fund,” Rawlings said.

Pension board chair Sam Friar said in a written statement Monday that the city repeatedly “walked away from the table and then came back asking for even more concessions from police and fire.”

Friar said that police and fire pension members agreed to cut their own pension benefits in order to work out a deal that would shore up the fund’s shortfall over decades and become the basis for Flynn's bill. 

“Our membership has given and given again," he said in the statement.

"Not an excuse"

At Monday’s hearing, Flynn questioned current and former city officials about why they never asked for legislative fixes to the fund until it brought Dallas to the brink of financial disaster. Current and former elected officials said previous pension administrators hid information about how deep the system’s financial hole was.

“That’s not an excuse,” Flynn told the Tribune on Thursday.

Flynn said his daughter's husband could be opposed to his legislation, but he doesn't know.

“If that subject comes up, I just say it’s not appropriate to talk about it,” Flynn said. His son-in-law could not be reached for comment Thursday. 

Flynn also said that the legislation is aimed at fixing a problem facing thousands of pension members, not just one. He said he was confident the pensions committee would unanimously pass his bill to the full House for a vote and that it would become law.

"I'm very optimistic," he said. 

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State government 85th Legislative Session Dan Flynn Texas Legislature