Editorial | The Daily Astorian

The good news is Gov. Kate Brown finally has a plan for putting PERS on solid financial footing. The bad news is that it includes pushing SAIF off that solid ground, as well as taking most of Oregonians’ tax “kicker” refund next year.

Brown says her proposal has something for anyone to like and to dislike. She is correct. The Oregon Education Association immediately screamed that she was trying to cut teachers’ salaries. That is false. Brown wants public employees to accept a slight reduction in their future pensions so as to help pay the unfunded actuarial liability of the Oregon Public Employees Retirement System.

The governor calls her proposal “shared responsibility.” Shared pain is more like it.

PERS’ inadequate funding is not the fault of everyday Oregonians or of current public employees. No, the blame lies with the 20th century legislators and union leaders who disregarded how bloated PERS retirement obligations possessed the potential to undermine state, school and local government budgets.

Brown’s suggestion to take all but $100 of each Oregonian’s kicker refund will draw howls from taxpayers. It certainly is one way to spread the PERS solution — and pain — among all Oregonians. But it smacks of class warfare, just like many other ideas in the Democrat-dominated Oregon Capitol. Any person, any business and any organization that makes much money seems to be under attack.

The governor’s suggested raid on the State Accident Insurance Fund is a perfect and unfortunate example. Legislators in 1982 illegally raided the semi-public workers’ compensation carrier, taking $81 million to prop up the state budget.

After being forced to repay that money with interest, the Legislature learned from its mistake by subsequently making it legal in the future to raid SAIF surplus reserves. Brown and legislators considering her plan apparently didn’t learn much else. They are seduced by lawyers’ advice that the new raid would be legal, just as then-Rep. Peter Courtney, D-Salem — now the Senate president — and other legislators were assured in 1982 that their bipartisan raid on SAIF was legal.

As now, state officials at the time said SAIF had far more reserves than necessary for future claims and thus could easily weather the Legislature’s intrusion. Maybe. But SAIF’s sales plummeted, sending it into a years-long tailspin. It turns out that companies don’t like to do business with an insurer whose money can be taken on a whim by the Legislature. Meanwhile, SAIF’s top officials were so angry — for good reason — that they quit and formed a competing, private workers’ compensation carrier that took a significant share of SAIF’s business.

As justification for a new raid on SAIF, the governor and her cohorts point out that Oregon has some of the lowest workers’ compensation rates in the nation and the highest rate of dividends being paid back to employers.

Isn’t that what we want — accident prevention being more effective, employers paying less for coverage and SAIF customers getting rebates on some of their premiums, plus interest earned? That sounds like a well-run program, unlike PERS.

A legitimate argument can be made for SAIF to work with school districts on lowering their workers’ compensation premiums. However, school districts are not the only governments facing soaring PERS rates. Rural public employers, especially fire districts, are especially hard-hit.

Meanwhile, Brown is dead-set against offering current and future public employees a defined contribution plan, like a 401(k), as a complete alternative to PERS’ defined benefit. She is wrong. So, too, are the legislators whose solution is to merely extend PERS’ debt over more years, holding down the yearly cost to employers but increasing the overall cost.

There is more to Brown’s plan, including her idea of diverting estate and capital gains taxes to pay for PERS. Such taxes are absurdly high in Oregon, but at least this way they would go for a good purpose.

Still, the best that can be said about Brown’s proposal is that it is … a proposal, not necessarily a wise or innovative proposal.