Houston, the fourth-largest city in the United States, registered its first deficit ever recorded since its founding in 1836. Mayor Sylvester Turner (D), according to the Houston Chronicle, says the $95 million deficit is due to the growth of the pension obligations incurred by the Texas metropolis. Houston joins Dallas to ask the Texas legislature this year to approve reforms in order to address their relative financial woes.
Currently, an audit shows that pensions are underfunded in Houston at $7.7 billion as of June of 2016, which represents a doubling since 2014.
Despite the bad news, Mayor Turner says his city is “strong and vibrant." New rules have obliged cities to report with greater honesty about pension obligations. A trend toward deficit was noted in the 2015 audit. It showed that Houston’s assets surpassed its liabilities by just $146 million. Since taking office in January 2016, Turner has embarked on reforming the city’s pension plan.
Houston thus joins other cities with financial troubles, which is a situation very familiar to states in the Northeast, and Great Lake States. For example, the school system in Baltimore, for example, is facing a $129 million deficit in next fiscal year's budget. This represents more than twice the deficit of last year. School CEO Sonja Santelises said last week that she is not going to announce any staff reductions or other budget cuts. In Detroit, the situation is much worse: In the the 2015 fiscal year, the net deficit for the city ballooned to $1.66 billion. Approximately $900 million of the nearly $1.7 billion deficit is because of unfunded pension liabilities. Back in 2009, Detroit schools’ deficit stood at $400 million. Both Detroit and Baltimore are facing decreasing school enrollment.