The national pension crisis is much closer and much more serious than politicians—especially, but not exclusively Democrats—would like you to believe. A familiar-sounding dispatch from Oregon:
Just how bad is Oregon’s public pension funding crisis?
Bad enough that Rukaiyah Adams, the normally polished investment professional who is vice chair of the Oregon Investment Council, broke down in tears last week as she spoke of passing a record $22 billion in unfunded promises to future taxpayers.
“My call to the Legislature and to the governor is for leadership on this, and I mean right now,” Adams said during last Wednesday’s joint meeting of the Oregon Public Employees Retirement System board and the citizen panel that oversees its investments. “This is becoming a moral issue. We can’t just talk about numbers anymore.”
The numbers are bleak. Oregon’s pension system owes billions of dollars more to retirees than it has, and the last major attempt to fix the problem was shot down in courts.
In this case, it is the Democrats that are digging their heels in the deepest. Their response?
A handful of lawmakers are set to meet Wednesday in hopes of jumpstarting a conversation on pension reforms in the 2017 legislative session. They have a list of ideas already vetted by state lawyers. They say the ideas could help plug an $885 million budget hit looming over the next two years, fallout after the Oregon Supreme Court rejected most of a package of pension reforms negotiated in 2013.
But Democratic leaders, including Gov. Kate Brown, so far say they’re not interested. In an interview this week, Brown said she saw pension costs as a very important issue, but “from my perspective, that list is not legally viable and not likely to result in significant financial savings.”
It’s a similar story from Senate President Peter Courtney, D-Salem, and House Speaker Tina Kotek, D-Portland. They insist there are no more money-saving moves that could be both legally viable and economically significant.
Remaining pension reforms would also mean cutting pay and retirement benefits for current state workers — which would alienate Democratic benefactors in Oregon’s public employee unions.
Clever: the solutions on offer will be challenged in the courts, and presumably those that can pass muster are too small to make a difference. And keep in mind, through all of this, Oregon is still using the ‘rosy scenario’ estimates of rates of return on investments to calculate the shortfall.
So what is to be done instead? Corporations must be taxed heavily, of course:
Kotek and Brown are both backing a controversial, union-backed proposed tax increase on large corporations on the fall ballot. Measure 97 would raise $3 billion a year by taxing 2.5 percent of certain corporations’ sales over $25 million. But Brown also said that revenue should be spent as supporters have promised: to beef up spending on schools and social services.
A more perfect example of ostrich syndrome would be hard to come by. Hiking taxes on corporations will end up destroying jobs by forcing companies to relocate, which will depress future tax revenues.
Do read the whole thing. This can’t end well for Oregon—or for the countless other cities and states facing down very similar nightmares in their near future.