Oregons legislative session is ending without meaningful reform to the states public pension system. Elected officials from both parties squandered a ripe opportunity to address the staggering costs of the Public Employee Retirement System, known as PERS.
School districts and local governments faced daunting layoffs and budget cuts because of staggering increases needed to fund the pension system. Business groups had signed off on tax increases as part of the solution. It was a non-election year, giving cover to legislators willing to buck powerful public employee unions. Editorials from newspapers across the state were supportive of taking strong action.
Yet, after six months of making a lot of noise about PERS reform, the Legislature will adjourn with little to show other than more wishful thinking.
This failure rests squarely on the shoulders of Gov. John Kitzhaber.
The two parties had different ideas on how to reform PERS. When a stalemate occurs, it falls to the governor to craft a compromise. A strong governor would have done that rather than allowing the Legislature to leave Salem without a solution.
Oh, Gov. Kitzhaber did show up. He kicked off the year with a clarion call for preserving the long-term viability of PERS and immediate cuts of nearly $1 billion. But the governor quickly caved, signaling that he would sign a bill with half those savings and a few minor changes to benefits.
Kitzhaber then left the country to attend a superfluous conference on happiness in Bhutan, returning to find that budget talks had collapsed because of the lack of meaningful PERS reform. He called legislative leaders together for two days of private talks at the governors mansion in Salem meetings that apparently pushed the sides further apart.
Finally, the governor dashed any hope of compromise when he flatly rejected a grand bargain that included a GOP-proposed tax reduction for small businesses.
Gov. Kitzhabers lack of leadership on PERS stands out, but he was not the only dysfunctional player in Salem. House Speaker Tina Kotek demonstrated her inexperience by allowing only one of 40 PERS bills to get a hearing, infuriating many legislators whose votes she would later need. Republican strategy was equally dubious as they held hostage an unrelated hospital tax and waited too long to unveil their small business tax plan.
The PERS bill that managed to pass the Legislature on a party-line vote by Democrats is not commensurate with the scale of Oregons pension problem. It promises minor savings this next biennium. It uses accounting gimmickry to postpone costs. And it fails to deal with the underlying problems most notably the guaranteed 8 percent investment return for employees.
The stunning failure of Gov. Kitzhaber and legislative leaders leaves Oregon with the third most expensive public pension system in the nation. This is a system that saddles state taxpayers with staggering unfunded liability while allowing career public employees to earn more in retirement than they did while working.
In Oregon, thats called business as usual.