Lawmakers are moving forward with a measure to do away with a loophole that allows long-serving legislators to increase their annual pay by $140,000 by dipping into their pension while continuing to draw a state salary.
But both the Senate and House version of the bill to eliminate the legislative six-figure pay bump would “grandfather” in lawmakers who have already opted into the benefit from the Texas Employees Retirement System which was created by a law passed by the Legislature in 2021.
Sen. Joan Huffman, a Houston Republican who is pushing to make the law change said once the state has let an employee opt in to the benefit, it can no longer take it away.
“I have no idea who or if anyone utilized this provision, but if they did, under the law, constitutionally we can’t go back and retroactively take that away from them,” Huffman told the Senate Finance Committee on Wednesday. “This will be moving forward. That’s the law. That’s the way it has to be.”
Huffman’s bill and a companion bill in the House by Rep. Greg Bonnen, R-Friendswood, were both approved unanimously by legislative committees Wednesday. They still need the approval of both chambers before the end of the legislative session, which ends on Memorial Day.
The double-dipping provision was introduced in the final days of the 2021 session into pension legislation that was aimed at tackling a $15 billion hole in the Employees Retirement System.
Bonnen introduced an amendment that allowed state employees who have maxed out their pension annuities to withdraw their full annuities while continuing to work. He did not say the bill would apply to some longtime lawmakers, and the provision was adopted by the House on a voice vote, a procedure used for noncontroversial items that don’t require a record vote.
The law change went largely under the radar until the Houston Chronicle reported on it last January. By that time, the law had gone into effect and only three lawmakers qualified for the benefit outright: Rep. Senfronia Thompson and Sen. John Whitmire, two Houston Democrats who first entered office 50 years ago, and Rep. Tom Craddick, R-Midland, a former House speaker who has been in office for 54 years.
Craddick and Thompson have refused to answer questions about whether they have tapped into the benefit. Whitmire has said multiple times he did not accept it.
On Wednesday, Huffman said she did not intend for that provision to be part of the original legislation and that the two chambers had hammered out a deal to remove the provision before the law received final approval in 2021. But before they could get that done, House Democrats walked out of the chamber in the final days of the Legislature to stop the passage of a bill that would make the state’s voting laws much tougher.
“The choice over in the Senate was either to vote out the bill as it was or to let it die with all its incredible billion-dollar reforms,” Huffman said Wednesday. “So we chose to go ahead, and I made the commitment at that time that I would remove this on the first available opportunity, which was this session.”
Bonnen told the House Appropriations Committee earlier this month that when the bill passed it applied to about 40 state employees, with three of them being lawmakers.
“This became somewhat controversial,” he said. “As a result, there’s a desire to change that policy.”
To max out their annuities, state employees typically have to work 43.5 years. Other state lawmakers could also be eligible for the benefit because the Employees Retirement System allows employees to buy or transfer credits for years of service. But the retirement system has said it cannot disclose the number of lawmakers who have opted into the benefit for privacy reasons.
That means the public may never know how many lawmakers have increased their take-home annual pay by $140,000, or who they are.
Whitmire has said he rejected the benefit when it was offered to him by the retirement fund. He accused Craddick of orchestrating the provision’s introduction into the law. Craddick has never responded to that accusation.
Pension payments for state employees grow based on years of service and are typically capped at the state worker’s maximum salary, to be collected upon retirement. But state lawmakers, who make an annual salary of $7,200, have retirement benefits tied to the salaries of state district judges, who make $140,000 — meaning lawmakers who stay in office could have an opportunity to collect retirement payments that far exceed their state salaries.
In the mid-2010s, the Legislature shut down a loophole after public pressure that allowed former Gov. Rick Perry to double-dip into his salary and pension. Jon Taylor, a political scientist at the University of Texas at San Antonio who has taught public administration ethics, said he was surprised that lawmakers introduced another loophole in 2021 after the public blowback when Perry’s loophole was revealed.
“Why even do this? Why allow it?” Taylor said. “What is this supposed to be, some valedictory patting of backs?”
He said the policy of double-dipping for state employees who give up more lucrative jobs in the private sector is common but is different when applied to elected officials who chose to run for office. Legislators, in particular, serve part time, and most have other jobs, which are often high paying.
“We’re talking about elected officials who have well-off jobs elsewhere and have well-off salaries elsewhere and pensions elsewhere. This is just extra cash for them,” he said. “They’re not normal state employees. They’re not the person at [the Texas Department of Transportation] filing paperwork and dealing with traffic planning in San Antonio.”
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