The El Paso City Council on Tuesday may decide whether to support a bill in the Texas Legislature that would change how the city’s police and fire pension fund is administered, including a key provision that would end a requirement that voters approve increasing taxpayer-funded contributions.
House Bill 4591, introduced in March by state Rep. Mary González, D-El Paso, includes changes to contributions to police and fire pension funds. The language in the bill is supported by the board that oversees the pension fund, but has been opposed by city officials.
The city is concerned that, if the bill passes, the pension board will immediately ask for higher contributions from taxpayers to support a 1.5% cost-of-living adjustment for retired police officers and firefighters, which city officials say could cost an additional $6 million a year.
A key change in González’s bill would allow the pension board to request an increase in pension benefits from the City Council without voter approval, which is currently required.
“The city of El Paso opposes HB 4591 due to our commitment to fiscal responsibility for the present and future. While we support our police and fire retirees, this bill would impose a significant financial burden on the city without necessary checks, such as voter oversight. We need a plan to address the unfunded liability (in the pension fund) before discussing statutory changes,” City Manager Dionne Mack said in an emailed statement to El Paso Matters.
Police and fire employees under the fund pay 18% of their salaries toward the retirement fund, while the city contributes 18% of the total amount it expends on wages of fund participants. That translated to a $34 million contribution from each the city and fund members in fiscal year 2023, according to the fund’s most recent annual report released in November.
Tyler Grossman, the El Paso Police and Fire Pension Fund executive director and chief investment officer, supports the bill and said it does not obligate the city to automatically increase its contributions. Rather, he said, it solidifies a change approved by voters during the 2023 City Charter amendment election that made 18% the minimum contribution the city makes toward the fund – rather than the cap previously outlined in the charter.
“(This bill) simply codifies what’s in the charter already,” Grossman told El Paso Matters. “Citizens have already voted, so … now we’re being told (by the city), ‘You’re going to ask for money for this (cost-of-living increase) this fiscal year.’ We have not asked for money for this fiscal year. We’re not going to ask for money for this fiscal year.”
City Council members interviewed by El Paso Matters said they want to have an open discussion with both the city and pension fund representatives to determine if the bill would adversely affect the city’s coffers.
The City Council will discuss whether to end the city’s opposition to González’s bill. Most of the current City Council members took office in January and weren’t involved in council discussions last year about potential legislation to change state pension laws.
It’s not clear that González’s bill will be taken up in the current legislative session, which ends June 2. House rules say that the last day for committees to make recommendations on bills is May 12, and González’s bill hasn’t yet been scheduled for a hearing.
Rep. González was not available for an interview about her bill.
Council members have been meeting in recent weeks with the pension board and city staff to discuss the issue.
“I’m in a dilemma, because I’m hearing one thing, I’m reading one thing, and then I’m hearing something else,” said city Rep. Lily Limón, who placed the item on the agenda.
Stephen Ian Voglewede, the director of the city’s strategic and legislative affairs, said the Pensions, Investments & Financial Services Committee generally does not move forward with bills that do not have the support of both the pension and the city.
“There’s a chance that they won’t take up the bill, but if we send in a letter of support all of a sudden, saying that we’re in agreement … there’s a higher probability of (the bill) getting taken up at that point,” Voglewede told El Paso Matters.
The introduction of the bill stems, in part, from a 1.5% cost of living increase to the fund for police and firefighters hired after 2007 – referred to as Tier 2 fund participants – approved by the prior City Council on Nov. 22. Council at the time agreed to approve the increase after the pension board assured it that the fund could pay for it without immediately asking the city for a higher contribution.
The pension fund can currently cover the cost of the raise, but it would increase the time it would add to the pension plan’s unfunded liability, or amortization rate. The pension currently has a 15-year amortization rate, according to its 2024 annual financial report.
With no eventual city increase, that period of time would hit about 26 years – just under the 30-year recommended threshold.
Grossman said the cost of living increase for those hired after 2007 would not need to begin to be paid out until 2032 and the fund can support it, even if the city does not increase its contribution in the near future.
The estimated cost of the cost-of-living increase to city taxpayers would be about $6 million annually if the pension fund remains at the current 15-year amortization rate.
Some City Council members are concerned that the economic uncertainty being created by President Donald Trump’s threats of cutting federal funding and recent tariff war will hurt both the city and pension fund.
“My concern is deeper than just the potential of a bill in Austin right now,” said city Rep. Art Fierro. “My concern is we’re coming into a budget period where there’s so much uncertainty. … I would hate to support something, and then when the item comes up, we don’t have the money, and how – how are we going to explain that to the taxpayer.”
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