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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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