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Oregon Democrats unveil pension-cut proposal

Mar 25, 2013 | 3 Comments


By JONATHAN J. COOPER
Of the Associated Press

SALEM — Oregon Democrats on Monday unveiled the details of their proposed cuts in pensions for retired government workers, leaning hardest on workers with larger retirement checks.

Public employee unions denounced the plan as illegal and irresponsible, and Republicans said it fell far short of what's needed to fix a pension system that's consuming an increasing share of tax dollars.

Democrats, who have majorities in the state House and Senate, said the plan would save state and local governments about $455 million over the next two years. That's less than competing proposals by the Oregon School Boards Association, legislative Republicans and Democratic Gov. John Kitzhaber.

Democrats said their plan is more likely to stand up in court and is more equitable to low- and middle-income retirees. Legislative committees are scheduled to hear public testimony on their bill Wednesday.

Democrats say the cuts to the Public Employees Retirement System are needed to fund schools at their desired level, $6.75 billion.

“We're trying to both stabilize the PERS system and make sure we're taking care of our obligations to the next generation,” said Rep. Peter Buckley, D-Ashland, the House's chief budget writer.

Public-employee unions responded fiercely, saying the proposal is an unconstitutional breach of a contract between the state and its workers. They say the pension system's unfunded liability is the result of investment losses during the Great Recession, and they want the state to go after bankers they blame for the losses.

The measure sticks closely to a framework Democrats outlined earlier this month. In addition to the $455 million that their proposal would save, Democrats want to push back $350 million in government pension contributions into future years.

Rep. Mike McLane of Powell Butte, the Republican leader, said that's “like skipping a credit card payment, which doesn't fix anything.” The whole package falls short of helping state and local governments deal with the burden of pension payments, he said.

“How can any person call that a serious fix?” McLane said. “It's not serious, it's cosmetic.”

Pension checks for retired government workers currently rise at a rate of 2 percent per year.

The Democratic proposal would create a new graduated scale. The first $20,000 would continue growing at 2 percent a year. The next $20,000 would grow at 1.5 percent a year, and the next $20,000 at 1 percent. Incomes above $60,000 would rise by 0.25 percent a year.

Their proposal also would also eliminate a tax break for retirees living out of state that's intended to make up for state income taxes.

On top of cutting pensions, Democrats are also pushing to raise more revenue from wealthy taxpayers by limiting tax credits and deductions, but they haven't spelled out their plan yet.

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The bill is SB 822: http://bit.ly/14qxbRw .

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Contact AP writer Jonathan J. Cooper at http://twitter.com/jjcooper .

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Comments

08:06 am - Tue, March 26 2013
Don Dix said:
"Public-employee unions responded fiercely, saying the proposal is an unconstitutional breach of a contract between the state and its workers. They say the pension system's unfunded liability is the result of investment losses during the Great Recession, and they want the state to go after bankers they blame for the losses."

So people who lost private retirement funds during the same recession are stuck with the losses, while the public employee unions expect the state to sue the banks on their behalf. It's all about me, me, me! Where is the 'fairness' in this scenario?

Here's an idea: Terminate every public contract and re-hire those who wish to continue employment with the government (with a sensible contract that disallows bending the rules to favor greater retirement payouts). Those who refuse to re-sign could find work in the private sector that the unions believe is so well-paying. This could also reduce the amount of overlapping duties by several agencies, which in turn would effectively reduce the labor costs.

The alternative seems to be unions draining the state funds until they are gone -- and when that occurs, contract or not, paychecks will cease. Breaking the state may not be the goal, but expecting gold-plated contracts with all the platinum bennys can only hasten the eventual overdraft.

03:13 pm - Tue, March 26 2013
kona said:
The underlying problem is that public sector employees are dealing with other public sector employees making deals that only hurts the State of Oregon and not those remaining employees.
06:08 pm - Tue, March 26 2013
troy prouty said:
Unions aren't always the problem. BUT they become a problem when in government. Working for government is not to be a "get rich" job. It is suppose to be stable with decent benefits and help you feel like your helping your community. The problem with government is people want to move up the ladder of capitalism in something that is suppose to be frugal.

troy*

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