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Tuesday, June 19, 2012

Best of the worst

Public employee retirement benefits in Oregon are really starting to cut into the quality of life here. More and more tax revenue is going to pay retired politicians and bureaucrats, and as a result less and less is available for basic public services. Ted Sickinger of the O, who's one of the few reporters in town who understands all this, writes about it here.

For those who like happy talk, meanwhile, you can read this, which natters on about how Oregon is actually relatively better off than most other states. Who was it that talked about being "the last to die for a mistake"?

With two completely different versions of the story floating around, guess which one the Portland Business Journal picked up. Just guess.

Comments (18)

The sad part is all the BlueOregon and public employees are going to go to the: "See we're much better, now just keep paying into it." Meanwhile, Kitz and the legislature keeps ignoring it like it will go away.

The really sad part is that that is the highest priority debt, so schools, roads and police get cut before we take $0.01 out of employee benes.

The scary part is the 3rd party that said we should be contributing $4.5B instead of $1.1B every session to PERS for employee benes. Considering the state budget is like $15B, that is a lot of coin.

To paraphrase, our govt is of the people, by the people and for the public employees.

I love the projected 8% estimated return on investments. And how do they determine this number?

They panel votes! What fools!

Wait till their investments in private equity go bust, then they will probably see a minus 8% return.

Meanwhile instead of being prudent during distressed economic times, our officials are spending as if no tomorrow. The whole scene is entirely insane, they are not stopping, thus debt swamping us. I think people are in for a rude awakening if they think things will somehow just go back to normal and work out. All I can say about that is I hope they are right and my assessment is wrong.

It is easy to pick on this , but why has no one raised the gas tax in DECADES. That alone would pay for all our needs , and start cleaning the air !

Not that it will make anyone feel better but we just moved to New Jersey from Beaverton. Property taxes went up 150% (from $4300 to $10,500), car insurance doubled, sales tax of 7% and a state income tax as well. Teachers, public sector workers and cops are eating this state alive with overtime and outrageous pensions. Based on my short experience here so far I wish I had Oregon's problems.

PERS isn't great, but at least it's about 73% funded. Compared with the billions unfunded in CoPo Police and Fire pensions, PERS looks positively sound. CoPo is really scary - and nobody's addressing it.

The Ted Sickinger story on how former UO coach Mike Bellotti got $5 million in unfunded PERS money is amazing. Particularly the bit about the divorce and remarriage. Does PERS have anyone on their staff who questions deals like this? Apparently not.


But AFSCME needed some good news for their convention this week. (think it was afscme anyway)

Tell me why we give politicians a pension ?

...but why has no one raised the gas tax in DECADES.

The last state gas tax increase came in 2011. It raised the tax from $.24 to $.30 per gallon.

Multnomah County also has a $.03 per gallon gasoline tax and Washington County has a $.01 per gallon tax.

See: http://www.oregon.gov/ODOT/CS/FTG/pages/reqgasdiscl.aspx

30% for PERS when you can't the bonded PERS that some school districts did. Budget breaker, but "it's for the children, who are our future!"

can't = count. Yay iPad!

"PERS isn't great, but at least it's about 73% funded."

Yeah and they only need to take #1.1B extra from schools and police to get to that level - Every year.

Also missing from the numbers are the benefit costs. In some school districts, employees and their families receive full medical insurance at no cost to the employee. Not a small number at all.

There is a finite (and perhaps declining) amount of tax revenue, and ever increasing costs to pay salaries, benefits, and pensions. Counting on an 8% return on pension fund investments while vilifying Wall Street at the same time doesn't make sense. Increasing pension benefits when returns were above 8% instead of building up reserves now seems like a very bad idea.

The conundrum is that the unions negotiated the best possible deal for its members without thinking about how benefits would be paid for in the future. Our representatives didn't pay much attention, either. Hard to blame the employees, except that none of them thought much about how much their benefits would cost in the future. They accepted their negotiated contracts in good faith.

Who had the fiduciary responsibility? What recourse do taxpayers have for this failure?

In the end, it cannot continue. It will blow up. The voting public will not stand for all the tax revenue going to pay the deficits for unfunded or poorly funded pension and retirement benefits, while essential services and schools funding shrinks to nothing.

Which administration and legislature is going to have the guts to face the issues? What is going to stop the exodus of smarter people from moving to more responsible and stable states? What can Oregon do to attract families with above average incomes who are able to pay above average income and property taxes to pay the ever increasing costs of running the state?

Recall that Salem Republicans OBSTRUCTED contract negotiations of a reasonable wage increase for public employees, 1988-89, which is what led to the 'kick the can down the road' non-solution of promising larger PERS contributions and returns ... someday in the future ... for who doesn't die before then.

Republican sieg heil goosestep IDIOCY made this PERS mess.
And maybe ALEC dictated the IDIOCY on hate-filled Republicans:

When ALEC Takes Over Your Town, By JOE NOCERA, NYTimes, June 18, 2012

The Rhode Island State Legislature finally adjourned its 2012 session around 3:30 a.m. on Wednesday morning. It had been a brutal last few days.

ALEC ... the conservative group has a very clear agenda for dealing with state budgets. It wants to shrink them.

... two Woonsocket legislators quickly decided ... they could do a lot more than just fix the schools’ problem. They could actually shrink the town government!

And how does one go about doing that? By refusing [civility] to go along with tax increases and forcing the city to the edge of bankruptcy

Here’s the rub. Pensions are not the core problem in Woonsocket. [Republican sociopathic hate is the problem.] Yes, Woonsocket has a pension shortfall, but it is more manageable than many other places and has almost nothing to do with the current crisis.

Shrinking government sounds appealing. We all have our favorite examples of silly regulations and bloated bureaucracies. But struggling municipalities like Woonsocket don’t have a lot of fat; cutting means reducing or eliminating programs that citizens depend on.

ALEC donors might be prosecuted for civil sedition, and they can pay for the pensions and municipal damages they caused as premeditated harm. (But DoJ is corrupt and unlawful, bought off to bumble around and not prosecute.) ALEC donors are corporate evils. They have store fronts, windows and merchandise. If desperate scraps&crumbs survival mobs vented frustration and anger on ALEC-evil properties it would be an understandable catharsis.

Hey Tenskwatawa -

You forgot to blame Bush and the Koch Brothers in your rant. Does MSNBC/Media Matters know you are plagiarizing their talking points?

ORS 238.600(2) still provides in part:

(2) If the Public Employees Retirement System is terminated * * * each member of the system has a nonforfeitable right to the benefits that the member has accrued * * * to the extent that those benefits are funded. [subsection added in 1999.]

The wording is consistent with the Oregon Supreme Court's determination that PERS can invest the private savings of the public employees (I say captive investors) in equities, consistent with the Oregon Constitution, but only so long as the government makes no guarantee to cover for private investment losses. Sprague v. Straub, 252 Or 507 (1969).

Mr. James Dalton, chairman of the PERS Board, plainly misstates the law when he asserts (as per the linked Oregonian article):

"We have a $16 billion unfunded liability," he said. "The question isn't if you're going to pay. The question is when you're going to pay."

I can still hear the Court asking James Baker (as independent lawyer for PERB) at oral argument on the PERS "reform" case whether PERS could be terminated, to which he had to answer yes, and note ORS 238.600. I was the only one who had pointed to that provision, in my amicus brief. Some folks apparently need to be reminded of it yet again.

That mistake is a big one, which alone could be grounds to remove James Dalton from his position (in my opinion). If he would care to attribute it to a particular named lawyer in a representative capacity then let him refer the questioner to them to answer directly, in their capacity as a lawyer.

To bolster Ted Sickinger's more realistic view of Oregon's public pension problem, take a look at some other independent studies that paint a far gloomier picture than the Pew study wants us to see.

Two such studies determine that Oregon has more than twice the Pew level of unfunded liabilities.

source: http://www.statebudgetsolutions.org/doclib/20110304_StatePensionLiabilityMarch4.pdf

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