Putting our finances in order – otherwise, we simply can’t deliver the services that Houstonians need.

Fixing our mobility crisis and decaying infrastructure – you should be able to safely drive, bike or walk around your neighborhood on streets and sidewalks that aren't broken.

Creating safer, livable neighborhoods – we have to crack down on crime, using modern community-based policing to work with our residents, not against them.

This election is not about making Houston great. Houston is already great. This election is about who can make our government work. It’s about who has the best solutions; the most groundbreaking ideas; the drive and the vision."^[18]

I helped design a citywide effort called ReBuild Houston, which created a more responsible and conservative way to fund road reconstruction and drainage improvements across our entire city. The program has tripled road and drainage repair spending, lowered street and drainage debt by $350 million, and has been done with a conservative "pay-as-you-go" payment system so we don't raise taxes or pass on debt to our children and grandchildren.

My pension reform plan, available at costelloformayor.com, outlines how we will get our city finances in shape, put 1,500 police officers back on the street, and provide tax relief for senior homeowners. As a city, we can and must do better."^[18]

Addressing City Finances: Balance our commitments to city workers and public safety personnel while maintaining core services. Partner with employee groups to develop systems that incorporate technology and best management practices that eliminate waste and redundant operational costs.

Integrated Mobility & Transit Solutions: Potholes are a priority, but a comprehensive solution is necessary to effectively address our transit challenges. Part of my plan would include: completing the Bayou Greenways 2020 plan as a part of an integrated, multimodal transportation network; building connectors to trails using utility rights of way; optimizing METRO’s new “ReImagined” bus network; adding additional Bus Rapid Transit routes; and incentivizing commuters to use our mass transit systems."^[18]

Catch the Crooks: Empower HPD to drive down our unacceptable rates of crime. Last year, the vast majority of burglaries, robberies, and sexual assaults reported in Houston went unsolved. The proportion of serious crimes solved in Houston is well below national averages, and we have to do better.

Balance the Budget: Implement sensible, fair pension reform; address excessive overtime costs; close the failed crime lab; use zero-based budgets for every City department. Fight ineffective spending to defend homeowners from endless increases in taxes and fees."^[18]

"Our next Mayor must understand the complexities of our financial pressures while working with others toward a comprehensive solution on issues such as public pensions. A large part of the City's fiscal pressure is the uncertainty of meeting the obligations of our three pension systems, with liabilities totaling almost $3.2 billion. As dire as that situation sounds, let's remember that annual pension obligations are only fourth on the list of five of the City's must-meet annual financial obligations.

Solving our pension problem by itself only goes so far toward making Houston more efficient and financially solvent. We need a new approach to addressing pension pressures, looking at them as a symptom of the City's larger fiscal challenges. As Mayor, my first priority will be to make sure we're getting the most out of every dollar, ensuring not a dime is wasted. Advances in technology, especially as they are used in financial management, can make government more efficient and as cost-effective as possible. Our personal bank balances are just a mouse click away, and the City can broaden technology to solve almost any problem.

My administration will conduct audits throughout the city in every department to reduce costs and create a new, modern government. If government is closer to you, with more interaction through technology, we create efficiencies and improve accountability. I recognize our pension challenges will not be solved overnight, but I'll bring all parties to the table and work toward a system based on the fiscal realities we face.

I support a strong defined-benefit retirement system but also recognize we need to reform what we currently have. I won't balance our finances on the backs of the men and women who protect and serve us every day. For their sacrifices, they deserve a secure retirement. We must honor the commitments we have made to all city employees, and we must honor a commitment to taxpayers to give you an accountable and effective City government."^[27]

That’s why Steve has taken the lead on a critically important first step to solve this problem, and that’s to return local control of municipal pensions. You see, it isn’t states that go bankrupt, only cities do. And as the state’s largest city and the one with the most pressing pension problem, Houstonians should have the authority to craft their own solution rather than continuing to leave its fate in the hands of typical politicians in Austin.

And when talking about local solutions, Steve promises you this – as your mayor, he will finally put an end to the damaging cycle where the City of Houston fails to fund its pensions thereby racking up tens of millions of dollars in new debt. That’s an unfair practice and also a recipe for financial catastrophe.

Instead of playing politics on this issue as so many have done, and continue to do today, Steve Costello is going to lead on it. Making sure Houston funds pensions and protects the taxpayer. Houstonians should expect nothing less from City Hall."^[28]

This is not sustainable.

It’s easy for some to say pension reform is a local issue, but this isn’t limited to Houston. Currently, a required portion of the solution to our pension issues rests with the Texas Legislature – meaning that Houstonians’ budget decisions are controlled by legislators in Austin. Without pension reform, layoffs will be necessary in order to balance Houston’s budget – which means that fewer potholes will be filled, fewer police officers will patrol our streets, fewer libraries and parks will be available to our communities and fewer businesses will look to Houston as a place to call home. We must begin working now so the next legislative session will see results.

The following principles should guide any legislative solutions:

• Benefits that are already fully earned must be protected;
• Future benefit construction for current and future employees must be in line with the City of Houston’s financial priorities and constraints;
• The City of Houston, rather than the State or fund beneficiaries, must control the future benefits of City of Houston employees;
• There must be full transparency for the Mayor and City Council and of employee benefit plans, including payouts;
• Pension security requires that the City fully fund the Actuarial Required Contribution every year based on a reasonable assumed discount rate without exception (current discount rates are set at 8.5%, while 7.5% is the national standard).

Real reform is needed before the rest of the city must pay the price for this unsustainable situation. Fire, Police and Municipal employees work hard every day to keep this city running. They deserve a sustainable system. However, the pension obligations do not operate in a vacuum. The entire city budget and operations must be examined and re-engineered for the present day."^[29]

There is no silver bullet solution to Houston’s legacy pension obligations. There are, however, ways to reduce the risks and improve the City’s ability to address problems that have plagued us for over two decades.

As Mayor, I’ll take the following steps to better control the City’s pension challenges:

• Immediately strengthen the City’s lobbying presence in Austin to work for needed statutory reform for increased local governance of the City’s pension obligations.
• Through the present 'meet and confer' process, I will propose a sensible approach to reshape and redefine pension offerings with reasonable city contributions. This is a necessary step to get control of our out-of-control spending.
• We must recalibrate how we calculate actuarial liability. A better approach to consider is to tie projected pension benefits to actual market performance.
• The City must begin serious consideration of insuring the second and third decades of projected actuarial liability instead of surrendering to present market investment strategies adopted by the pension boards. This would be a temporary measure to lessen the demands on revenue until we improve our present financial picture. The insurance approach is meaningful only if premium cost-reduction justifies the shift, which initial conversations suggest is possible.
• Concentrate city government on core services – fire, police, infrastructure – instead of the 23-department behemoth we presently have. The cost savings from this will provide millions of dollars to address pension shortfalls.
• The City must abandon the current single-highest-pay-period-method for calculating pension obligations.
• Stop the practice of issuing debt to catch up on pension obligations. Using debt to pay debt is a destructive fiscal cycle that must end.
• Understand that a single solution – such as a 401k, Defined Contribution, or ERISA Plan – will not suddenly resolve our legacy pension obligations. These approaches can have positive effects on new and current hires, but they will not address the significant obligations to which many employees are already entitled.
• We must institute a disciplined, pragmatic, and multi-year approach to return our City to financial health. City employees are great assets, and a progressive and multifaceted partnership with citizens, businesses, legislators, and employees is needed to address the pension challenges we face."^[30]

I believe that, in Texas, a deal is still a deal. Even if you believe that the city and the Texas Legislature made bad deals for the taxpayers when they agreed to the terms of the current pension plans, they nonetheless were the deals made by our duly elected representatives. If we do not like the deals they are making for us, then that is an issue to take up at the ballot box. It is not justification for reneging on the deals they made.

So what do we do about the $3.7 billion hole? We extend the payments.

Houston has the great fortune of a strong economy, which is likely to continue for some time. We have the luxury of borrowing this money at very low rates and spreading out the shortfall over a longer term. It is not an ideal solution, but if we try to continue making the payments as scheduled, we will either need to significantly raise property taxes or severely cut back city services — and we will not be able to make the infrastructure investments the city will need if it is going to continue to grow.

Other reforms can increase the effectiveness of our pension spending while improving the level of service to pensioners: for instance, I also think employees should have the right to opt out of the pension plans at a discounted cash value. Many city employees have told me they would prefer to have control over their retirement accounts.

Who would oppose a plan to stop offering city employees defined-contribution benefits? Taxpayers should favor it because it starts fixing the city’s biggest problem while dramatically reducing any budgetary pressure for service cuts and the like. Existing employees and beneficiaries should also favor moving NEW city employees to defined contribution plans because it means they will actually receive the benefits they were promised.

The one group that will not like it is the cottage industry that has developed around these pension plans. Last year, the plans doled out $54 million in salaries to pension plan executives, Wall Street investment bankers, lawyers, lobbyists, accountants and actuaries. They will come up with every reason you can imagine to keep the city on the path to financial ruin so that they can keep their noses in the pension trough.

President Ronald Reagan once said, "There are no easy answers, but there are simple answers. We must have the courage to do what we know is morally right." Continuing to make retirement promises that are not sustainable is not morally right. And it is irresponsible for future taxpayers and future municipal employees. We have all the tools we need to solve this problem, and once we do, we can finally begin to focus our efforts and resources making smart investments in our shared future."^[31]

Sylvester supports local control - but to achieve it, we must put our local house in order.

Sylvester has a 26-year track record of getting things done in the legislature and have occupied major positions under Democratic and Republican leadership. He knows that state legislators don't want to be put in the position of settling local disputes. They just throw up their hands and refuse to get involved.

That's why any meaningful reforms in Austin will require all stakeholders in Houston sitting at the table discussing the city's financial challenges now and into the future.

Pension reform will not provide near-term budget relief.

Some of Sylvester's opponents are basing their budget plans on reaping hundreds of millions of dollars from pension reform. We must remember that the legislature does not meet again until 2017-and that the earliest any pension reform law could take effect is September 2017. The city will have had to pass two balanced budgets before then - including dealing with a spike in municipal debt in 2017-2018.

Others are suggesting that we use pension bonds to reduce the unfunded liability - a proposal that ignores our current debt situation.

An all-or-nothing approach will get us nothing - except continued total gridlock - but we can work together to find a solution.

We did not reach this unfunded liability overnight and it will take a series of steps to rein in the costs. Take, for example, Texas' Employee Retiree System, which had an unfunded liability of $7.5 billion and a cost to the state of $500 million a year. We made some design changes in a previous session of the legislature. In this legislative session, Sylvester co-authored the bill to make the plan actuarially sound. Sylvester suggests a similar approach - working with all stakeholders to reach common ground - for Houston. Good faith in communication and interaction are essential elements."^[33]

"Well, I find it very disappointing we're at this particular point in the city's history. I'm afraid we're in for a very divisive fight and I just don't think we needed to be here. This is not a city that hates. This is not a city that discriminates against people. This is one of the most open, welcoming cities there is in America. Nobody in their right mind is in favor of discrimination. If we were being asked to vote on whether we favor discrimination, it would be clear what everyone's opinion would be. We are being asked to vote on a particular 36-page ordinance and a lot of people including myself have problems with this particular ordinance...It's unlike any other non-discrimination ordinance that I could find anyplace in the country, it's a very different ordinance. For example, it has a definition of discrimination to give an advantage or a disadvantage to one of the protected classes...So, veterans are protected under this. If you read this ordinance literally, giving an advantage to a veteran is illegal under the ordinance. Wal-Mart's program to give preference to hiring veterans is illegal under this ordinance. And then, of course, you have the whole issue of sex-segregated facilities. Most of the ordinances have a specific exception for sex-segregated facilities. This one makes any kind of sex-segregated facility illegal." ^[39]

"As a businessman, a father, a grandfather of two lovely granddaughters, I support this ordinance. However, that being said, I'm pleased that Houstonians will have the ability and the right to vote on the ordinance and I'm confident that the community will make the right decision." ^[40]