Bend Bulletin Editorial Board
February 20, 2019
New arrivals to Oregon sometimes have a hard time figuring out how state government works.
For instance, the state has a $26 billion unfunded liability for its future pension costs. That means schools and other government entities can’t do as much teaching, road paving and law enforcing as they would otherwise. Why not? Because year after year, they almost inevitably have to pay more and more into the state’s Public Employees Retirement System to deal with runaway costs.
Schools in Oregon already have a future PERS shortfall of some $9 billion. Their PERS costs are likely to go up by $375 million over the next two years, and costs will continue to rise after that.
Gov. Kate Brown would like to increase school funding. She is hoping to get some $2 billion more into the schools with new taxes on businesses. But to make that $2 billion a real increase she would also need to find a way to add in another $3 billion just to keep up with projected PERS increases through 2021, according to The Oregonian.
Ideally, policymakers would look at the PERS problem from two angles. First, what can be done to pay the liability down? Second, what can be done to reduce the cost drivers that created a $26 billion unfunded actuarial liability?
But that’s not how things actually work here. The people in control of state government seem to recognize only the revenue problem, which leads them to look for new sources of revenue. The state’s businesses are consistently in legislators’ taxation crosshairs.
There’s another example of that this week. The Oregonian discovered through public records requests that Gov. Kate Brown is looking at selling the state’s workers compensation insurance corporation or seizing some of its capital surplus and using the proceeds to pay down the state’s PERS liability.
It wouldn’t be a direct tax in business. But make no mistake — it would be a functional tax on business.
Businesses in Oregon enjoy some of the lowest workers compensation costs in the country because of the success of the agency called SAIF. It basically has been taking in more in premiums than it has had in losses and expenses. Businesses in Oregon have benefited from low rates and have been getting some of their premiums returned. Despite that, SAIF’s surplus is growing. It now has a surplus of some $1.9 billion.
That success could make it an appetizing target for purchase from the state by a private entity.
One proposal apparently under consideration is for the state to sell SAIF. Another is to grab a big chunk of that surplus and use it to pay down the PERS liability. Businesses would lose one of the major advantages of working in Oregon and perhaps also face the additional $2 billion in new taxes Brown wants.
That’s the Oregon Way. Ignore the problems that send costs skyward and increase taxes on businesses to pay for it. Only in Salem, it seems, is it so easy to act as if squeezing businesses will have no effect on the people those businesses employ.