Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Is Dallas the next Detroit?
Old 12-04-2016, 01:05 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 2,420
Is Dallas the next Detroit?

Is Dallas next?

Dallas has been having retirees take large withdraws from public pensions. Is this the start of the next major city to declare bankruptcy?
__________________

bingybear is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-04-2016, 01:27 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: Huntsville, AL/Helen, GA
Posts: 3,992
Who knows? Sounds as if it's just another example of a city or state that promised their employees the pie in the sky--but without the apples to make it a pie.

Scores of cities and states are in the same position. But when it's said and done, if there's no money to pay retirees--it's not going to happen.

It's not like they can just increase property taxes in Dallas to make up the pension shortfall. Property taxes there are already debilitating. My best friend sold his big house in University Park when his property taxes hit $50K per year.
__________________

Bamaman is offline   Reply With Quote
Old 12-04-2016, 01:33 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 26,552
Wow!

Quote:
... the Dallas Police and Fire Pension System has asked the city for a one-time infusion of $1.1 billion, an amount roughly equal to Dallas's entire general fund budget but not even close to what the pension fund needs to be fully funded.
Quote:
...the fuse was lit back in 1993, when state lawmakers sweetened police and firefighter pensions beyond the wildest dreams of the typical Dallas resident. They added individual savings accounts, paying 8.5 percent interest per year...

...23 years of unmet goals had left Dallas with a hidden pension debt of almost $7 billion.
8.5% return guaranteed? This might have looked like a modest goal during the heyday of the stock boom of 1983-2000.

I guess they did not run FIRECalc.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 12-04-2016, 02:16 PM   #4
Thinks s/he gets paid by the post
Lakewood90712's Avatar
 
Join Date: Jul 2005
Posts: 2,063
I don't think so. The Detroit tax base , population and industrial base has been dying for 30 years. Not a good comparison IMO. Unless the oil industry moves out of Texas, then all bets are off. IIRC, Chevron has been moving jobs from California to TX.

As far as the pension system, most public pension systems , including the one I draw from are living in a fantasy world. Bond yields , the pension foundation of decades ago died off, and the equity markets just aren't going to return 7-8 % like the pension systems are counting on. The municipal pension system I belong to keeps shopping for new actuaries when they don't tell the city fathers what they want to hear. The current actuary firm is using 15 year " Smoothing " , whatever that means. Funding level is supposedly now at about 80% for the pension and 75% for the retiree medical. Was at 102% in 2002. The pension system let the city stop putting city money in for 2003, 2004. Employees had to keep contributing during the same period.
Lakewood90712 is offline   Reply With Quote
Old 12-04-2016, 03:23 PM   #5
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 2,938
The situation is very different. Detroit has lost 2/3 of its population over 60 years, but had many retirees and debts from when it was larger.
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 12-04-2016, 03:46 PM   #6
Full time employment: Posting here.
 
Join Date: Mar 2011
Location: Dallas
Posts: 530
Quote:
Originally Posted by Bamaman View Post
Who knows? Sounds as if it's just another example of a city or state that promised their employees the pie in the sky--but without the apples to make it a pie.

Scores of cities and states are in the same position. But when it's said and done, if there's no money to pay retirees--it's not going to happen.

It's not like they can just increase property taxes in Dallas to make up the pension shortfall. Property taxes there are already debilitating. My best friend sold his big house in University Park when his property taxes hit $50K per year.
University Park is not Dallas...and $50k puts his house in the $2.2 mil range. Again, not Dallas. "Park Cities" are incorporated cities of the rich folk. The most of Dallas metro is growing in the 2.2% in 2014-15. DFW is at 6.4 million and 2 of the 15 fastest growing cities are just north in McKinney & Frisco.

Property taxes are 2.2-5%, but we have no income tax saving many thousands for the working. Property values are kind of rediculous right now, but I figure it will level out soon. We live in the White Rock Lake area a couple of miles from U-park and you can get a modest home from $250k up to a nice place for $500k. Or go another 3 miles and pay as little as $125-150k. Plenty of choices.

Pensions here are probably not great, but there's a bigger mess in other cities, I'm sure, say Chicago or other dwindling tax base cities. Dallas skyline is riddled with cranes for high-rise condos which makes me think of Miami in 2007😞😭
Surewhitey is offline   Reply With Quote
Old 12-04-2016, 03:55 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 3,276
As long as property owners are willing to bail out the pension funds there won't be a problem.

We voted with our feet and no longer pay property tax. I guess we do feel it in increased fees at some state and county parks, but you can drive around Detroit and Dallas if need be.
Fermion is online now   Reply With Quote
Old 12-04-2016, 03:59 PM   #8
gone traveling
 
Join Date: Sep 2013
Posts: 1,248
Quote:
Originally Posted by Fermion View Post
As long as property owners are willing to bail out the pension funds there won't be a problem.

We voted with our feet and no longer pay property tax. I guess we do feel it in increased fees at some state and county parks, but you can drive around Detroit and Dallas if need be.
Maybe that is why ton of FI Bloggers are renters for ever. Allegedly financially they come up on top as renters.

I guess if you want to vote with your feet and you are an owner it will cost you 6% commission
eta2020 is offline   Reply With Quote
Old 12-04-2016, 04:01 PM   #9
Full time employment: Posting here.
 
Join Date: Mar 2011
Location: Dallas
Posts: 530
Quote:
Originally Posted by Fermion View Post
As long as property owners are willing to bail out the pension funds there won't be a problem.

We voted with our feet and no longer pay property tax. I guess we do feel it in increased fees at some state and county parks, but you can drive around Detroit and Dallas if need be.
The pension fund trustee took some risky bets (timberland in Uruguay?!?)

Make them take responsibility for goofy "investments". I would vote with my feet if they upped my taxes... they'll get a boost with this year's appreciations for sure.
Surewhitey is offline   Reply With Quote
Old 12-04-2016, 05:04 PM   #10
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Houston
Posts: 1,447
Quote:
Originally Posted by eta2020 View Post
Maybe that is why ton of FI Bloggers are renters for ever. Allegedly financially they come up on top as renters.

I guess if you want to vote with your feet and you are an owner it will cost you 6% commission
I'm pretty sure landlords still pay property tax, and build that into their calculations when setting the rent...
soupcxan is offline   Reply With Quote
Old 12-04-2016, 05:20 PM   #11
Moderator Emeritus
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 43,082
Quote:
Originally Posted by Surewhitey View Post
Property taxes are 2.2-5%, but we have no income tax saving many thousands for the working.
Wow! The sum of my property tax PLUS my state income tax together are only 1.5% of what I paid for my home last year (which is the tax assessor's valuation of it).

But then, I live in Louisiana. While I love it here, some might say that you get what you pay for.

__________________
I have drunken deep of joy,
And I will taste no other wine tonight.

― Percy Bysshe Shelley
W2R is offline   Reply With Quote
Old 12-04-2016, 05:45 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Dawg52's Avatar
 
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 8,404
Quote:
Originally Posted by W2R View Post

But then, I live in Louisiana. While I love it here, some might say that you get what you pay for.
Ha....most would say that about where I live. But that's OK too.
__________________
Retired 3/31/2007@52
Investing style: Full time wuss.
Dawg52 is offline   Reply With Quote
Old 12-04-2016, 05:53 PM   #13
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: Huntsville, AL/Helen, GA
Posts: 3,992
Our state's completely broke but property taxes are ridiculously cheap. $225K house taxes are maybe $650 per year, and disabled folks have no property taxes.

Yep, some states get what they pay for with sub-standard schools and gov't.

I just feel so bad for those that may have their "day of reckoning" when their pensions dry up and are not there. It's got to happen in so many places eventually.
Bamaman is offline   Reply With Quote
Old 12-04-2016, 07:30 PM   #14
Thinks s/he gets paid by the post
 
Join Date: May 2008
Posts: 4,383
Do current cops and firemen get the same deal, 8.5% return?

Surprised no politician would try to renegotiate that.
explanade is offline   Reply With Quote
Old 12-04-2016, 11:53 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 8,022
Quote:
Originally Posted by W2R View Post
Wow! The sum of my property tax PLUS my state income tax together are only 1.5% of what I paid for my home last year (which is the tax assessor's valuation of it).

But then, I live in Louisiana. While I love it here, some might say that you get what you pay for.

Grumble Grumble.... Our property taxes are 2.5% of the market value, and State income tax is now "down" to 3.75%. A total of 6.25%

And Chicago is famous for deep dish pizza and being the murder capital of the country

Maybe we should pay less.
Sunset is offline   Reply With Quote
Old 12-05-2016, 12:39 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 15,325
I know I will get flamed from the LEO and if we have any firefighters who are here...


But, why are these two pensions so untouchable What about the other workers who were promised something and then get it reduced.... I think that the same should happen to all pensions of any city that needs to go into BK....


From what I remember (and from what I can read) the police and firefighters of Detroit lost nothing.... other pensions took a cut, but not that much...

April: The city’s Police and Fire Retirement System votes to support terms of a bankruptcy mediation settlement that would spare its members from pension cuts, but is not yet on board with other elements of the city’s plan.



The plan to guarantee 8.5% was just nuts... and it should have been changed many years ago.... but, the unions of the P&F are smart and get state laws passed to prevent fixing the stupidity of the politicians....



It does seem like Houston has taken the first step to get its pension plan back in line.... It will be interesting to see what the pension plans come up with to save money, since the plan calls for them to figure it out!!!

http://www.bizjournals.com/houston/n...on-reform.html
Texas Proud is offline   Reply With Quote
Old 12-05-2016, 07:31 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 12,051
Quote:
Originally Posted by Texas Proud View Post
...........

From what I remember (and from what I can read) the police and firefighters of Detroit lost nothing.... other pensions took a cut, but not that much...
Quote:
April: The city’s Police and Fire Retirement System votes to support terms of a bankruptcy mediation settlement that would spare its members from pension cuts, but is not yet on board with other elements of the city’s plan.
As I recall, the police and fire pensions had separate funding mechanisms and were in better shape. Politics may have also played a part as here in MI, we have a one party control at state level and police / fire workers tend to support that party, where as rank and file city workers support the other party.

Quote:
The plan to guarantee 8.5% was just nuts... and it should have been changed many years ago.... but, the unions of the P&F are smart and get state laws passed to prevent fixing the stupidity of the politicians................
You can blame the unions or you can blame the politicians that irresponsibly promise these benefits knowing they will be long gone when the time bomb goes off. There really needs to be some adult supervision over these deals as they really screw things up down the road both for the cities and the retirees who depend on the promises.
__________________
You probably mean principal not principle. Judgment only has one "e".
travelover is offline   Reply With Quote
Old 12-05-2016, 07:37 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 3,276
The politicians are long gone but so are some of the residents who voted for them. The ones who stay are left holding the bag even though they are not the ones who directly or indirectly promised those benefits.

Perhaps we need to have a new housing law though that spells out what you are getting into before you sign a contract to buy a house in an area with underfunded public pensions.
Fermion is online now   Reply With Quote
Old 12-05-2016, 07:38 AM   #19
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
Quote:
Originally Posted by W2R View Post
But then, I live in Louisiana. While I love it here, some might say that you get what you pay for.
When I got out of Tech school in the USAF, a few of us got orders to go to Barksdale AFB, LA. We were all high-fiving and the instructor wondered what we were so happy about. We said we were headed to LA, as in Los Angeles, CA. At 18, we were thinking about beaches and girls.

The instructor broke the news to us. He said if the world had a place to spray deodorant, it would be in Louisiana, i.e. LA. I actually grew to like Louisiana, and it wasn't too hot back then, as I did not know any better.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline   Reply With Quote
Old 12-05-2016, 07:53 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 12,051
Quote:
Originally Posted by Fermion View Post
..........Perhaps we need to have a new housing law though that spells out what you are getting into before you sign a contract to buy a house in an area with underfunded public pensions.
I like this idea.
__________________

__________________
You probably mean principal not principle. Judgment only has one "e".
travelover is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Business Trip to Dallas - Anything to try? vvsonikvv Other topics 12 01-16-2007 08:46 PM
Scott Burns leaving Dallas Morning News Nords FIRE and Money 35 09-25-2006 11:30 AM
Houston, Dallas, Austin Real Estate bubble? Sam FIRE and Money 26 08-31-2006 04:29 PM
Dallas RE Question for Charlie haha Other topics 14 02-12-2005 10:26 AM
Dallas, Texas....good place to live? Tommy_Dolitte Young Dreamers 24 09-30-2004 01:00 AM

» Quick Links

 
All times are GMT -6. The time now is 07:17 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×