Albany Democrat Herald
May 8, 2019

It remains one of the big questions stalking this legislative session, just as it has stalked previous sessions: What should the state do about its underfunded public pension system?

But there could be a big difference this year: If this year’s Legislature isn’t able to approve some sort of reforms to the Public Employees Retirement System, the issue may well end up before voters in November 2020, in what almost certainly would be a hotly contested and bruising campaign over a number of PERS ballot measures.

That campaign could follow on the heels of another initiative effort: If the Legislature is able to pass a proposed $1 billion annual tax on certain Oregon businesses (which assumes that Senate Democrats somehow are able to lure enough Republicans back to the chamber to achieve a quorum), it’s a good bet that voters will get a chance to reject the tax.

It’s a potential one-two punch at the ballot that could make the heated 2016 battle over Measure 97, another proposed business tax, look like child’s play. (Supporters and foes of that measure spent more than $42 million, easily setting a record for the costliest campaign in state history.)

With that said, though, it only makes sense to connect the two issues. After all, the issues have been linked throughout the session, with the state’s largest business organization, Oregon Business & Industry, saying it would remain neutral on the proposed business tax — but only if legislators also pursued reforms to PERS. The worry is that, without those reforms, rising premiums for PERS would eat away an increasingly large chunk of that revenue, which right now is earmarked for K-12 education.

Speaker of the House Tina Kotek and Senate President Peter Courtney have said they have PERS reforms in mind, but have yet to offer details. In the meantime, Gov. Kate Brown has proposed plans to divert various state revenue streams into an attempt to reduce the $27 billion unfunded liability in PERS. She also has suggested limiting tax rebates and requiring public employees to contribute to their pension benefits.

To some degree, Brown’s proposals echo the four ballot measures being proposed by Oregon business groups. Those measures would, in part, establish a 401(k) program for new or existing state employees, require employee contributions to the pension fund and bar the state from taking on new pension debt.

Public employee unions already have denounced these proposals, but they may be swimming against the tide to some extent, if you can believe the results of a new poll from DHM Research of Portland. (Ted Sickinger of The Oregonian, whose reporting on PERS continues to be essential, wrote about the poll in a weekend story.)

The poll, which DHM said it paid for itself, found substantial support for making changes to PERS, including replacing the current pension system with a 401(k) plan and requiring contributions from employees.

Some two-thirds of voters rejected the idea of making no changes to PERS.

The poll drew criticism, as you would expect, from officials with public employee unions, who took issue with the way the questions were phrased. It would have been better, the unions said, if it had asked whether public employees should take a cut to their pay or benefits in order to deal with the pension debt.

But all parties agreed that an election campaign over proposed PERS reforms would be costly and potentially quite nasty. That’s part of the reason why Tim Nesbitt, a former labor leader who has been consulting with business groups about PERS for years, is hoping to see the Legislature take action — this session — on the pension system.

“Everybody’s first desire is for a legislative solution,” Nesbitt told The Oregonian.

Indeed. So it’s up to the Legislature to take action, and the pressure for state leaders to do so likely only will mount as the clock ticks down the days until adjournment. (mm)