The Solution to Houston’s Deficit

The Chronicle reports that the City of Houston will end the year with a deficit for the first time in its history. Mayor Turner attributes the $95 million deficit to the city’s ongoing pension problems. In a statement issues on Friday, he said

We must have meaningful pension reform and we must have a strategic long-term plan to achieve sustainable structural budget balance, where the city does not spend more than it receives in revenue each year.

The city’s pension fund was underfunded by $3.9 billion at the end of fiscal year 2014. The deficit has nearly doubled to $7.7 billion as of June 30, 2016. City Council has passed a plan to cut future benefits by $2.5 billion and issue $1 billion in bonds in an effort to reduce the underfunding. Cutting benefits is a good start, but incurring more debt to fund the liability is simply robbing Peter to pay Paul.

The real problem isn’t revenues. The real problem is spending. And at least one member of Council understands this.

Council member Dave Martin said the audit findings “came as no surprise of course because the pension reform plan hasn’t been put in place.” But he said the city also needs to cut the expenses of every city department.

“We don’t have a revenue problem, we have an expense problem,” said Martin, who represents District E. “We spend more than we take in.”

The city’s spending problem is an inevitable consequence of being involved in activities that are beyond government’s proper purpose—the protection of individual rights. A city government limited to this purpose would provide the police and courts. It would not be involved in parks, libraries, housing, cultural services, and the myriad other activities that the city engages in.

The budget for fiscal year 2017 allots about $1.42 billion for public safety—the police, courts, and an emergency fund. The remainder of the $5.1 billion budget goes for activites such as parks, libraries, airports, and health services. In short, more than 70 percent of the city’s budget is allocated for improper purposes.

Further savings would be realized if the police and courts were not prosecuting activities that violate nobody’s rights, such as drug possession and prostitution. When we consider the fact that more than half of Texas’ inmates are incarcerated for drug violations, it is clear that the budget for public safety could be reduced substantially without any reduction in service.

The city’s fiscal problems are easy to solve. All it takes is the moral courage to limit city government to its only proper purpose.

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