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Oregon Wrestles with Public Pension Costs

Conflict between public employees on the one hand and schools and business groups on the other is setting up a political clash in Oregon. The Portland Tribune:

Oregon’s major business groups want lawmakers to start dealing with rising public pension costs as early as the session that opens Feb. 1.

Although those costs start to kick in with the 2017-19 budget cycle — 18 months away — advocates say it’s not too early to whittle down an unfunded liability projected at $18 billion over the next few decades.

“If we do nothing, 100 percent of the burden falls on taxpayers, government services and their ability to undertake reinvestment in budgets going forward,” says Tim Nesbitt, currently a consultant for the Oregon Business Plan. […]

Cheri Helt, co-chair of the Bend-La Pine School Board, says pension costs will jump from the current 16 percent of payroll to 20 percent in 2017-19, and to 25 percent in the cycle afterward.

The question of how America’s state and local governments dig themselves out of their massive pension hole will be one of the great (and underrated) fiscal and political questions of the next generation. As the article implies, the process of divvying up resources to fund the pensions will not be pretty, pitting key Democratic constituencies—public employees (producers of services) and citizens who consume public services—against one another in a blue civil war. The reckoning can only be put off for so long.

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  • Andrew Allison

    Is there a State or municipality in the Union which has not sold it’s soul and it’s future to public employee pensions?

    • rheddles

      Is there a State or municipality in the Union which has not mortgaged it’s soul and it’s future to public employee pensions?

      The same thing was true of corporations 60 years ago. But GAAP and a competitive market forced them to deal with the handwriting on the wall. Government, making its own rules, is able to ignore reality for extended periods.

      • FiftycalTX

        As the joyful recipient of local govt pension and SS, I am glad to report that MY pension system is 100% funded. And my monthly income is secure, at least unless the criminals in Congress figure out a way to cut my SS. And I take in the same amount of cash as when I was “working”. Still not a great sum, but enough to get by.

    • mikekelley10

      From what I’ve read, this is mostly a big problem in Democrat-run states. The more Democrats, the more problem. Illinois and California are the poster children for the effect. Next time a lefty tells you that California has a “balanced budget”, ask him/her about the unfunded pension and health care liabilities there. When Democrats and public sector union bosses negotiate, there is nobody in the room to represent taxpayers.

      • Andrew Allison

        I live in California, so know that the State is, to all-intents-and-purposes, bankrupt. But I suspect that most States are in various stages of the same. The incestuous relationship between public employee unions and the employers is a nightmare for taxpayers.

  • Jmaci

    You have to wonder how issues like public employee pensions and rising crime rates in states and cities controlled by Democrats will play out in next year’s elections. Will voters – even minority voters – keep voting for more of the same? Stay tuned.

    • Boritz

      I believe this has become an exercise in false metrics. Republicans have made extraordinary gains statistically at every level of government, but the liberal agenda goes forward full speed like the juggernaut it is as witness Ryan and the budget deal.

  • teapartydoc

    Blue civil war? No. The unions and their patrons in government will continue to gang up on the taxpayer, whose only recourse will be to vote with his feet.

    • Jim__L

      And yet, unionists are not the reliable voting constituency for Democrats they used to be… many of them are voting with their feet already.

  • markterribile

    The fix is really very simple, just not very popular: No state or municipal government may offer a defined benefit pension. They MAY offer very generous 401K’s, with options for the employee to invest a fraction of the money into annuities.
    Since the unions won’t accept this, throw them this bone: bargaining units may offer defined benefit pensions BUT all contributions from the employing government agency MUST be made as the employee works AND the government’s obligation to the pension fund ends absolutely at the employee’s retirement (except that payments in arrears are still owed, and are subject to interest).
    These options will become more palatable when several states and large municipalities have gone into default and bankruptcy.

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