Last November, the financial analysts at Moody’s issued what was, for many, a troubling report. It included the fifteen U.S. cities with the largest unfunded pension liabilities—to put it in English, the money missing from city coffers that’s supposed to pay retirement benefits to police, fire, and other city employees, not just today but down the road. Of the fifteen cities, Chicago topped the list, and San Francisco was fifteenth.

For those of us in Texas, with our gloriously high credit ratings and fervent allegiance to low taxes, restrained spending and conservative oversight of a robust Rainy Day Fund, the news that certain big cities around the country were in a heap of trouble might have elicited nothing more than a collective, if somewhat condescending, shrug. Except for one thing: Texas’s four biggest cities were all high on the list. Dallas, which came in second, is on the hook for $7.6 billion, about five times the amount of its total operating revenues. Houston was fourth, with a $10 billion shortfall—equal to four times its operating revenues. Austin, at number nine, has $2.7 billion in liabilities, and San Antonio, ranked number twelve, is $2.3 billion short. That seems like very bad news for just about any Texan. Particularly since the vast majority of Texans now live in urban areas. How can a state known for fiscal responsibility have so many cities with empty pockets?

Let’s start by asserting that this isn’t just a Texas problem. Pension systems are causing fiscal havoc across the country. And only a handful of experts really understand the problem. Words like “pension” and “unfunded liabilities” tend to have a Sominex-like effect on most people—that is, until said people are personally affected. Pensions have been used to attract and retain skilled workers for dangerous or relatively low-paying public-sector jobs. If you are a police officer, a firefighter, or a municipal employee, your city grants you a generous, and in some cases more than generous, retirement compensation for the years you devoted to, or risked your life for, the citizens of your community. Traditionally, that has meant an old-fashioned pension, a guaranteed paycheck for the rest of your days.

If, on the other hand, you are an ordinary citizen, who expects that trash will be picked up, potholes filled, and, yes, that police and firefighters will show up when summoned, you might be unhappy about more and more of your tax dollars going not to city services but to pay the pensions of retired city employees. That has happened because, nowadays, there just isn’t enough money to cover it all. Over time, Texas cities have tried to save themselves by betting on everything from higher oil prices to ever larger population growth to higher rates of return to somewhat confounding Hail Mary investments, but such Texas-size optimism hasn’t worked out. The holes keep getting deeper.

Each time city officials have confronted unpleasant but more realistic solutions—raising taxes, cutting services, or trying to persuade city workers to take less money or accept a different kind of retirement plan, like a 401(k) instead of a traditional pension—they tend to end up chickening out. The result has been growing liabilities and still less money for services, and the very real prospect of bankruptcy. In other words, just beyond the soporific verbiage of a looming fiscal disaster is a simple financial problem so politically thorny that finding a solution has, so far, been nearly impossible.

For instance, many people outside of Dallas were shocked to see a story on the front page of the New York Times in November with the unfortunate headline “Dallas Stares Down a Texas-size Threat of Bankruptcy.” After all, Dallas has maintained a superlative reputation for fiscal responsibility and civic good since it started retooling its reputation after the Kennedy assassination. Dallas was supposed to be a city of stability and seriousness, of corporate headquarters and gleaming mega-churches. Its current mayor, Mike Rawlings, is a former CEO of Pizza Hut.

But, as the Times explained, what’s happened in Dallas is an “extreme example” of what’s happening around the U.S. Workers were promised generous pensions years back, and the city’s attempts to cover those payments as they grew became more and more desperate, bordering, finally, on the bizarre, and possibly the criminal (Rawlings has called in the FBI and the Texas Rangers to investigate mishandling of the pension fund). If it weren’t tragic, it would make for dark comedy.

And the bumbling extends well beyond city hall. Cities must pay the pensions, but it’s the Legislature that makes and approves the rules for the city systems. Back in 1993, when Dallas was trying to keep experienced police and firefighters from leaving for better-paying jobs elsewhere, lawmakers allowed for generous pension boosts, promising 8.5 percent interest paid yearly to individual savings accounts once workers reached the ripe old retirement age of fifty. To keep this up, legislators required Dallas to freeze its pension contributions at 36 percent of the police and firefighters payroll. It was an article of faith that Dallas would keep growing and that those new tax dollars would continue to fund the retirement accounts. It was also believed—fervently—that the payroll would grow by 5 percent and that the pension fund would earn 9 percent annually on its investments. The Texas Pension Review Board and the plan’s actuarial firm were uneasy about the idea—when was the last time one of your investments earned a guaranteed 9 percent—but the Legislature okayed it.

The market proved too volatile to earn such high returns consistently. The economy took a downturn with the bursting housing bubble and the like. Suddenly earning 9 percent on the Dallas police and firefighters’ pension accounts was looking pretty tough. And pensioners found themselves at the mercy of fund managers and pension board members who were not exactly financial wizards, or even civic-minded. The Dallas pension fund started investing in various real estate deals in Dallas exurbs like Hawaii, Australia, and Uruguay. These investments required plan officials to make crucial, in-person inspections of their properties over the years, with stopovers in places like Zurich and Abu Dhabi, at a cost of around $1 million in travel expenses alone. That was small potatoes compared with the $32 million in management fees billed in a single year (2011).

Then there was the Museum Tower debacle. It was supposed to be a super-special luxury high-rise, located in the much-vaunted Dallas Arts District in close proximity to the beloved Nasher Sculpture Center, designed by the unimpeachable starchitect Renzo Piano. How could you lose? The pension fund invested $20 million initially, but then, somehow, wound up shelling out $200 million for the whole development. At the same time, the height of the building doubled and the reflected glare from the glass sheath started threatening the priceless art in the Nasher, not to mention immolating its world-class landscaping. What followed was nothing less than class war—pitting the pensioners against the arts community—and the tower, struck with a serious case of PR cooties, had lackluster sales. Meanwhile, the value of all those other far-flung investments began to crash. Still worse, as this news reached the actual pensioners, they started withdrawing money from their funds to the tune of $500 million (they are allowed to do so by law).

If Houston’s problems are less colorful, they are no less severe. They too date back to a sweet deal given police, firefighters, and city employees in 2001 by then-mayor and former police chief Lee Brown and the state legislators who approved the munificent plan. But unlike Dallas, the problem of Houston’s $10 billion pension shortfall, as calculated by Moody’s, can be traced to simple denial. The phrase “kick the can down the road” has been applied to virtually every mayor since Brown made the deal; term limits have essentially allowed each one to apply quick fixes or small reductions until they were safely out of office. Former mayors Bill White and Annise Parker tried to get some help from the Legislature but were spurned.

Now the job has fallen to Sylvester Turner, who took office a year ago riding to victory on the promise that he could pull Houston back from the brink. So far, he has managed to come up with a plan that spreads the pain around and promises to solve the problem within, um, thirty years. The package includes some reductions in benefits (like cost-of-living increases), a more realistic anticipated rate of return on investments (from 8 to 8.5 percent down to 7 percent), and a limit on the number of employees in a program that allows them to continue working while collecting their pensions (the program was instituted to help retain veteran workers, and it’s proved costly). The city will also issue $1 billion in bonds to begin closing the funding gap. But one of Turner’s concerns is whether Houston firefighters will go along with his plan as peaceably as the police and city workers. A lot of folks are bracing for those emotional arguments about the compensation for the people who risk their lives to protect the citizenry. Aren’t they owed a secure retirement?

But, of course, that’s only part of the problem. No matter what plan each mayor comes up with, it still has to be approved in Austin. History has shown that legislators don’t have to worry about paying for any plan, both literally and metaphorically, that they put in motion, and they are highly susceptible to powerful political contributors’—and fellow legislators’—desires (see Houston circa 2001 and Dallas circa 1993). There’s also the question of how interested a Republican Legislature will be in helping out cities that are predominantly Democratic. A lot of people in Houston are hoping that Turner’s decades as a state legislator, and his closeness to John Whitmire, who had long served on the Pension Review Board, which oversees all of Texas’s public pensions, will prove beneficial. He may be luckier than Rawlings, who so far has received little to no support for his entreaties.

Of late, the buzzwords are “local control.” Mayors want it, claiming rightfully that the legislators have no business making decisions that have ramifications they will not be responsible for. Legislators, on the other hand, have rightfully pointed to the incompetence of city officials who would rather boost their political currency by using public funds to support projects that are a lot more glamorous than funding pensions.

Meanwhile, the bankruptcy clock is ticking, as if those aging pensioners, not to mention the taxpayers of Texas’s big cities, had all the time in the world.