If you wish to help support the ongoing costs of running this blog and you haven't purchased anything through Amazon on this site, please consider a small donation to defray basic costs. It isn't free to me to keep this site current. I have to pay for bandwidth, costs of duplicating documents when they exist only in paper form, and keep printer ink around to read lengthy documents, and the time to do the research. Thank you. Marc Feldesman, site owner and publisher.
Oregon PERS Information is Copyright Marc R. Feldesman (c) 2003 - 2017 All Rights Reserved. Posts may not be reprinted without prior consent.


Please don't post your comments more than once. I moderate all comments and a delay between posting and appearing is part of the drill here. I get to all comments in due time. Please don't continually repost the same comment. Only one will be posted. Thank you.

Saturday, June 08, 2013

Idiot Wind

The week has passed with no additional news on the fate of PERS in the Legislature.  Two days of "high level" discussions at the Governor's mansion with leaders of both parties produced nothing of substance, and have managed to leave PERS members and all agencies receiving money from the State of Oregon on tenterhooks.  The failure of the Ds, the Rs, and the Kitzrobber to reach any sort of budget and PERS agreement increases the likelihood of either a session running into July and/or a special session when all the parties have cooled off and start to feel pressure from their constituents.

I remain puzzled by one issue.  The Ds and Rs paint their disagreement as one between additional tax revenues and additional cuts to PERS.  Obviously the Rs want additional (read draconian) cuts to PERS, while the Ds "only" want $200 million in additional revenue.  The Rs want $7 billion for schools, but again with no mechanism in the money (or the money from SB822) to insure that the funds actually make it to the classroom before being skimmed off by administrators, superintendents and other highly compensated individuals.  This seems to be foolish and even if the schools were to get all they asked for or at at least all they wanted, what would stop them from coming back in 2015-17 for even more.? We all know that the schools, in particular, have an insatiable appetite for more money, yet astonishingly little additional money goes to the people who need it - classroom teachers, classroom assistants, new books, more modern curriculum, etc.   But let's assume that this is the central wedge issue between Rs and Ds.  More PERS cuts for more school dollars, while the Ds want more revenue and lesser (or no more) PERS cuts.  Assuming this is the case, and also assume that the Kitzrobber was correct when he stated that, with the May forecast, the state has enough money to meet current budget needs and could adjourn and go home.  If this is true, why are the Ds still meeting with Rs.  Why not go home and let the Rs rest of their lack of accomplishments in this session.  Why not let them twist in the wind?

The answer, it seems, rests in what isn't being stated, what's blowing around in the idiot wind.  The elephant in the room isn't PERS right now.  The elephant is the nearly $2 billion in revenue generated by the renewal of the Hospital Provider's tax.  This tax, first approved in 2003 (if I recall correctly), is worth $1.3 billion in revenue to Oregon from providers and Federal reimbursements.  It was slated to sunset at the end of fiscal 2012, but is being continued indefinitely if approved by the Legislature.  The Oregon House approved the continuing resolution in mid-May by a 54-5 vote, but the bill is currently stalled in the Senate, undoubtedly because of R reluctance to support it unless they get additional PERS reform.  Since it is a revenue bill, it requires a 60% supermajority to pass.  The Ds have a shaky 16-14 majority in the Senate and would require 2 R votes to pass the resolution, assuming all Ds hold firm (which itself is questionable).

So, it is disingenuous, in the extreme, to suggest that the differences between the Rs and Ds is over the budget.  The budget is set.  The Rs want another $250 million or so for the schools, and they want to get it by cutting PERS by $1.3 billion.  The math doesn't work out there.  The Ds want another $250 million in taxes for what?  Who can't use additional revenue?  In any case, the issue is really about PERS versus the hospital tax, not PERS versus the Ds desire for an additional $250 million in taxes on corporations and affluent individuals and senior citizens who have medical expenses.

Neither side seems willing to budge at the moment; all the signs point toward a stalemate.  After Tuesday's meeting, in which Tina Kotek walked out, there are no further meetings scheduled.  The Ds can't just vote the current budget and go home because the hospital tax lingers there without the required two R votes.  Whatever happens, it doesn't seem to be happening quickly or at all.  I'm betting on continuing budget resolutions to keep government functioning past the end of the biennium, June 30, a possible adjournment, and then a special session to finish the budget later in the summer, about the time legislators are planning to take their summer vacations.  You better send spouses and kids away now legislators.  It is going to a long, hot, summer for the rest.  Don't blame anyone but yourselves.  You're all greedy, and you reap what you sow.  Enjoy your vacations in Salem.

 

21 comments:

Unknown said...

Marc, one of your points confuses me. While I do understand that the Feds can operate on 'continuing budget resolutions' until the Senate and House stop playing tug-of-war over a new Federal budget; I though Oregon law prevents CRs. My understanding (educate me if I'm wrong, I learn lots from you!) is that our state law *requires* a balanced budget and does not allow for CRs. Just wondering.
peg

mrfearless47 said...

With continuing resolutions the approved budgets can go forward while the legislature remains in session. They can't adjourn without an approved, balanced budget, as you correctly note, but with statutory sine die on July 13 they could end there. In this circumstance, one of several possibilities exist: approve a one-year budget to but time, or balance the budget without the provider tax and leave Medicare and OHP details to be worked out in special session, or adjourn with no final budget and reconvene a few days later in a special session. Do keep in mind that state employee union contracts also expire June 30. It should be an entertaining next 6 weeks. Too bad I'm going to be gone for the sine die fandango.

socialworker1 said...

Narc,
I have a question. I am a Tier 1 inactive who has not yet retired.
If I get in my paperwork to PERS to retire effective July 1, 2013 and this is before Kitzrobber and the legislature pass a bill to eliminate match, will my pension under match be protected?

mrfearless47 said...

To the best of my knowledge, if you retire on a day effective BEFORE any legislative changes take place, even with an emergency clause, you are out of the line of fire. July 1 seems fairly safe right now, as the Legislature doesn't seem to be organized enough to pass more anti-PERS legislation in the next few weeks.

mrfearless47 said...

@socialworker1. I'm sure it wasn't a freudian slip, but I kinda get uncomfortable when someone greets me as "Narc" . I'm a product of the 60s and that word has a special meaning. :-)

socialworker1 said...

Hi Marc,
So sorry about the Narc. When I am typing on my iphone it is so easy for me to miss the correct key. I know what you mean about being a product of the sixties.Thanks for all
your help in trying to sort out this PERS mess.

Befuddled said...

For those contemplating retirement, it takes effect on the first of the next month after papers are filed. Therefore, theoretically someone could get nailed if they sign papers and then later in the month the legislature both passes PERS changes AND does it as an emergency measure. This would mean that it would take place immediately. However, the legal opinion give to the Governor suggested that not providing timely notice of changes could hurt its chances in having such a law upheld during appeal.

Douglas Cook said...

From my talking to people the strategy appears to be to get sympathy for the educational reforms (more spending) by continuously mentioning the teachers who have been put out of there jobs because of the lack of funding caused by the expensive retirement system. Meaning - threaten the middle class with less money for direct classroom instruction. There are people who are paying attention to the real issues, however. The Beaverton school district is brewing another levy rejection after the disclosure of the big raise the superintendant was granted for no other apparent reason than the school board wanted to be nice to him. The people who are supposed to be watching the budgets aren't. They are looking out for themselves. Marc, playing the guilt and resentment game seems to a great strategy to confuse what should be the normal budget process.

Unknown said...

Quick question: what are the added COLA cuts in this "new package"...any guesses?

d llb said...

Marc, have you seen Pers modifications SB854 submitted yesterday? Could this be details of what Statesman Journal alluding to 'Budget deal in the works'?

mrfearless47 said...

The added COLA cuts are detailed in the newly introduced SB 854. I haven't written about it yet because the bill is 30 pages long, is so monumentally abusive and I'm not at all certain that this bill has any D support, in which case it is simply the Rs seeking gratuitous attention. I will try to summarize the essence of the bill when I finish it. Suffice it to say that my best estimate of the "new" COLA would be that it is likely to be about 1/3 of the currently revised COLA - in short, a royal screw job.

mrfearless47 said...

@d lib. I doubt it, but am trying to contact some of the Ds I know to see whether SB 854 is the "deal".

mrfearless47 said...

I'm pretty certain now that SB 854 is the last gasp of Rs trying to avoid the reality that new taxes are the only way they are going to get additional PERS reform. I still don't understand where the Hospital Provider Tax fits in with all this posturing, but it has to fit somewhere. Otherwise the Ds can just finish up the budgets and go home. Why are they still negotiating at this point.

janedoe said...

I am so SICK of waiting for the sine die. It already seems clear that the R's will hold the process hostage past June 30, but can they legally drag this misery out PAST JULY 13th?

mrfearless47 said...

No. July 13 is the statutory end to this session. But they can call sine die, adjourn and then have the governor call them into special session the next day.

janedoe said...

OMG, so HOW LONG can this thing really stretch out? how long could a special session last? are we EVER going to be done with this hell? (I realize it can come back this February.) Also, any guesses as to what kinds of deals will/will not be struck?

mrfearless47 said...

Jane. I wish I had some idea. I keep hearing murmurs of some sort of a bargain that involves more COLA cuts for retirees and a reduction in the annuitization rate for inactives retiring under Money Match. This is being offered in exchange for R votes on several tax measures. But nothing has been agreed upon and the Rs seem to be holding firm for more cuts, especially involving spiking. But I'll never be convinced that the Ds will give in to all of that, so it might still be possible that they will just stop, adjourn and go home to cool off. Hope springs eternal.

janedoe said...

So to clarify the trajectory from here on out, after the (possibly phony) sine die on July 13, HOW MANY special sessions and HOW LONG can these special sessions run? In other words are we going to be watching this pathetic and dysfunctional game playing through the end of August? Through the end of 2013? Through the rest of our natural lives? Thanks Marc.

mrfearless47 said...

I don't think Kitz will call a special session at all UNLESS he had an agreement from all parties on a solution to the current gridlock.

socialworker1 said...

If the legislature can't get together on more PERS reform by
The end of June, is it safe, as a Tier 1, Inactive,
To stay in the system til December 1 or should I still pull my retirement in June to go into effect
July 1?

mrfearless47 said...

Socialworker1. I wouldn't make any assumptions about when additional PERS reform might take place. The Legislature has until July 13 to complete its business and adjourn. If it doesn't finish by then, they can always be called back into special session. So if you were looking for more certainty sooner would be better than later.