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Friday, April 26, 2013

Tears of Rage

Well, the Oregon Legislature done screwed the pooch this time.  It is with rage that I report that the only people targeted to pay for the state's apparent financial difficulties are all current PERS retirees and all future PERS retirees.  Our Democratic supporters abandoned any sense of rationality to impose, on a strict party line vote, a reduction of modest to significant proportions on more than half of current PERS retirees by first reducing the Cost-of-Living Increase, and then completely decoupling the annual COLA from anything that resembles an increase in the cost-of-living.  Not one Democrat had the cajones to oppose this stupidity, not one Democrat asked the obvious question of what happens when the Oregon Supreme Court sends this measure back with a "you can't do that" ruling, and not one Democrat demanded that the money either be lockboxes until the court rules, or demanded any form of accountability from the schools who will harvest this money and use it to seed a bigger administrative structure than they have now.  Lest anyone doubt my predictions, ask in a couple of years for every school district to account for exactly where every penny of the PERS theft money went and how many new teachers, classroom supplies, and teaching materials this blood money bought.  I'm betting that of $400 million (before the OSC says "Nope") will be squandered in unimaginable ways, and few, if any, new teachers will be dotting the rolls of any of the school districts who are part of the OSBA (sponsors of the punitive SB 754).

As if things weren't bad enough, Tina Kotek, Speaker of the Oregon House, declared that she had the needed votes to pass the other piece of legislation required to balance the budget - a $275 million change to the deduction structure for higher income individuals.  When the time came for a vote, her promised two republican votes vanished quicker than $50 bucks in a military poker game.  Tina was played for a fool and ended up being the fool.  Now she's going to find out that she not only can't trust those who supported her, but those who promise to support her.

And, the big news is, of course, that the PERS tithe isn't big enough for those wheelers and dealers at the Oregonian, who continue to demand a more gigantic pound of flesh from future PERS retirees by adopting the draconian plan introduced by the rapists from the OSBA,  and its rapist-in-chief, highly paid lawyer Bill Gary, and his smarmy and unctuous sidekick, bald Jim Green.  I don't know whether there is time for this to get through the process before sine die but you can rest assured that the minority party is going to put the squeeze on the pansy-ass D's in the Legislature to capitulate or get no additional revenue for the school budgets.  The D's have placed themselves in this no-win situation - they have pissed off the unions, all of the union's constituencies, public retirees, the major newspapers, and all of the R's in and out of the current legislature.  That is an ugly place to be.  You want, desperately, to hold on to your majority, but everything you do keeps working to cost you seat after seat.  And you've placed the unions in a very precarious position.  No union official I've talked to wants to support any of the Democratic hacks in the current Legislature, but the alternative, the mean-spirited, ugly mouthed, and vicious Republicans represent an even worse alternative.  Our Governor, a weak-ass, self-absorbed, FORMER ER doc, has no truck with the Legislature and nothing to really hold over anyone's head.  His head is either in the clouds, in the rivers, or in Cynthia's ….."

So, will 2014 become the year that the shit hits the fan?  I think so.  I think that the political battle lines in Oregon are being drawn so starply that if the R's can run a rational and moderate candidate for Gov (no tea- baggers need apply), they could easily defeat whoever the D's run, whether KitzRobber or another poor schmuck with the same tired agenda.  Similarly, only D's in safe districts stand a chance of being reelected.  For them, "safe" is relative and their behavior this session is earning them the undying enmity of a constituency of nearly 325,000 PERS members and retirees.

If you are tired of being the Bank of Oregon, the safe (SAIF) where the only money people think about resides, then how you behave in the next year will determine what the fate of Oregon's PERS will be and how secure our retirements will remain.

I'm just tired of all this.  For all you Democrats out there, especially those in the Legislature, don't come looking to me for support or for understanding.  You've just made me the cash cow for the Oregon budget and I'm spitting mad.  You want money, go ask someone else.  You want to retain control of the Legislature, trying keeping your word.  You want to remain in office, stop drooling every time the Oregonian publishes a naughty editorial excoriating you about your record.  Why not ask the Oregonian what their retirement plan looks like.  Why not suggest that the Oregonian's editors be taxed on their pensions.

My letter to all Legislators this year (pardon my language):  Dear Legislator:  Fuck you.  Strong letter follows.    Excuse me while I go shed more tears of rage.

Monday, April 15, 2013

The Weight

Much confusion, anxiety, anger, and doubt continue to flood the Oregon Capitol as SB 822 passed through the Senate on a strict party line vote of 16-14.  The vote was delayed 2 days because Senator Richard Devlin, one of the Bill's sponsors was in the hospital for chest pains.  (This is probably the signal that Devlin may not run again, something that may energize those on the PERS side who are angry with Devlin for his sponsorship of SB 822).

The issue now is that the entire Co-Chairs' budget depends on savings from SB 822, which include COLA cuts for PERS retirees, removing the income tax subsidy for 19,000 PERS retirees living out of Oregon, and from a delayed billing of employers for $350 million of due and payable PERS payments.  The delay will end up costing employers more than they save because the interest on the obligation will continue to accrue until the money is repaid.  Moreover, the budget also includes approximately $275 million in revenue increases that require a 60% majority in the House to pass.  The D's on the House side are not as enamored with SB 822, but they don't want to cut as deeply as the R's on either House or Senate side.

This has created consternation and anguish and some conflicting rumors emerging out of Salem.  According to one set of rumors, the Ds have lined up enough support from the needed Rs to pass SB 822 as is, as well as to enact the $275 million in revenue measures.  On the other side, there are rumors that the Rs will not agree to the additional $275 million in revenue without more significant cuts to PERS.  

So, at this point in the game, the safest suggestion is to watch closely what goes on in the Legislature and not stop writing legislators.  The game is far from over; indeed, it MAY just be beginning and if that is the case, the weight retirees may carry might get larger.  The next three or four weeks will be critical to the outcome of the session.  Anyone who suggests that the Legislature is "done" with PERS for this session hasn't been paying close attention.

Tuesday, April 02, 2013

It's Alright Ma (I'm only bleeding)

The freight train you hear outside your window tonight is the one carrying SB 822 to its final resting place, on the Governor's desk, where he will assuredly sign the bill in 6 seconds flat. So much for the democratic process. The first public hearing on the bill was last Thursday, where the rules committee of Ways and Means took testimony for 3 plus hours. There was exactly zero support from the public on the bill either because it was viewed as illegal theft of earned and promised benefits from PERS retirees, or because it didn't solve any problem, but merely created more, or because it didn't go far enough in stealing from retirees or actives. Discussion continued briefly on Friday morning where more opposition was raised. In a typical case of completely ignoring all testimony - a fact yours truly predicted to the committee's faces on Thursday - the bill was rushed out to the Ways and Means Committee for more testimony and a work session tomorrow at 4:30. The final bill, which committee member and House Speaker Tina Kotek has already announced is in its final, unamendable form will come up for a joint Ways and Means full Committee vote on Friday April 5 at 9:00 am. At that point, all that remains is a vote from all the House and Senate members ( where the dumbocrats have a sizeable majority). All this looks like a slam dunk passage of the COLA cut, the elimination of the income tax subsidy for non-resident retirees, and allowing employers to defer about $350 million worth of employer required payments down the road an additional two years.

There are so many problems with this bill that despite Bill Gary's $500 per hour opinions on their legality, the legality is nearly immaterial to the damage they will do to the system, legal or not. First, the problem that motivates this "solution" is an Unfunded actuarial liabily that is $14 billion without employer side accounts, and $8.7 billion with the side accounts. While the savings from reducing the COLA payment obligation the present and future retirees works out to be approximately $400 million per biennium ASSUMING the savings accrue for the next 10 biennia. But the savings don't accrue at all under this bill. Instead, the $4+ billion savings in the next 20 years will be spent every year to keep employer rates artificially low, and at the end of 20 years, the system will be no better funded than it is now, unless the earnings approach Bernie Madoff levels. Second, the funds are supposed to prop up the K-12 budget with the governor insisting (pandering) that the money will be used to put more teachers in the classroom. That would be a noble gesture were it not for the inconvenient truth that nothing in this bill requires the employers to provide an audit trail that proves the money will end up in the classroom hiring new teachers, updating the curriculum with new books and possibly hiring a few teachers aides. I know way too much about how the educational system uses some creative accounting to hide the real purpose or placement of new funds, that without some serious checks and balances, perhaps accompanied by prison time for misuse of these funds, I'd be astonished if the net increase in teachers from this infusion of stolen cash leads to more than 50 genuinely new, full-time teachers.

Finally, we have the legislature buying into a scam previously reserved only for the PERS Board. If the legislature imposes an addition rate collar of $350 million so that money due to pay bills due now is allowed to drift unpaid for another two years, the increased costs just from that deferral alone will add another $60 million in interest costs to the deferred money, which will be added to the employer costs in 2015-17. Pushing the can down the road doesn't relieve employers of these current obligations. It just makes the next bill more expensive because the current costs that are deferred get added to the UAL and make the debt service on the UAL that much more expensive.

So, the logrolling of SB 822 has begun in all seriousness with public employee retirees being subjected to (probably) illegal cuts to their COLA benefit, with none of the savings retiring any portion of the UAL,none of the savings guaranteed via any mechanism to achieve its intended target - the children and their teachers, and accompanied by a deferral of mandatory payments by at least two more years and the UAL not declining, but rising by another nearly half a billion dollars.

If this is intelligent public policy, then I am the densest person on this planet. Don't look now ma, I'm only bleeding, just a little bit more. And the really encouraging piece of news is that after this bill goes into effect, we will all be back here again in two more years for the next round of cuts.