SALEM, Ore. (AP) - A task force delivered its final report Friday to Gov. Kate Brown on options to shrink the state’s bloated pension-fund deficit by $5 billion over the next five years.
Two of the suggestions - including privatizing the state’s public universities - didn’t thrill the Democratic governor.
Brown’s main Republican rival in next year’s gubernatorial race, Knute Buehler, threw cold water on another option: raising taxes on beer and wine.
Brown thanked the seven members of her task force for their research and commitment to identify ways for Oregon to keep its promise to retirees. She had convened the task force to identify opportunities to pay up to a quarter of the Public Employee Retirement System’s, or PERS, unfunded liability.
At the end of 2016, it was estimated that PERS lacked 25 percent of the funds needed to pay the projected benefits employees have already earned, the task force report said.
That deficit has ballooned to at least $25.3 billion, according to a calculation released in September. It is a huge problem bedeviling state lawmakers and other officials who aim to balance the state’s budget without depriving retired and current public sector employees - including those who work for the state, counties, cities and school districts - of their promised pensions.
The task force examined state assets, one-time revenue streams, and assets of other public employers that could be sold, bonded against or otherwise leveraged in order to cut the pension system’s unfunded actuarial liability.
They urged the governor and other state officials to weigh the benefits and costs of acting on the options “against the expected downsides of inaction.”
One option looked at several state-controlled entities that maintain substantial amounts of cash and short-term investments to cushion against financial downsides, and said the money could be pooled, with some transferred to PERS to reduce the deficit.
“This ’risk capital’ is rarely needed and may, in fact, never be drawn down.” the report said of the entities’ excess funds.
In a statement, Buehler’s campaign derided that option as “raiding the state’s emergency funds.”
“The governor’s pawn shop politics won’t fix PERS,” Buehler said.
Another option the task force mooted would be for the state to transfer some of the surplus capital of Oregon’s hybrid workers’ compensation system to PERS, or to sell the workers comp system. Brown said she had “serious concerns” about that latter option, as well as one to sell Oregon’s public universities.
The report noted that Oregon’s excise taxes on beer and wine are $0.08 and $0.67 per gallon respectively, have not changed since 1977 and are among the lowest in the nation. It said increasing them to national average rates of $0.35 and $1.03 respectively would raise $61 million per biennium.
Brown directed her staff to research the proposed the idea of pooling excess capital across state controlled entities, and to examine creating an incentive fund to partially match employers who further contribute to unfunded liabilities.
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