Every once in awhile, a bill that actually cures a problem with PERS comes along where everyone is a winner (The bill currently in process through the Legislature is HB 2867, which I will discuss below after some history). Sometime back in 2017, I wrote a post entitled "Tinfoil Hat", where I ruminated on something that had happened to me (and others) that made no sense, but seemed to come out of nowhere and triggered my antennae that something more sinister was afoot. The post concerned an email I got from PERS requiring me to recertify my Oregon Residency. Puzzled, I inquired of PERS and learned that the message went to more people than it should have, but that because of SB 861 way back in 2013, the Income Tax Remedy was no longer going to be paid to anyone living outside of Oregon. Since PERS has no direct way of determining residency, they used Oregon Department of Revenue tax filing information to determine residency. Each year, Oregon residents (and part-year residents) file their income taxes normally by April 15. Every year, people ask for, and routinely receive tax extensions to file their taxes later provided they pay an estimated amount by the due date. Sometime in early October, the DOR sends PERS a list of retirees filing income taxes by April 15 for the previous year. For most people, the fact of paying income taxes is prima facie evidence that you are (or were) a resident of Oregon and stands as residency certification for the next year. Until 2017, PERS didn't ask for any further recertification and it is not entirely clear why they started asking in late 2017. But, the poison pill here was that because they started asking, people were expected to recertify their residency by no later than December 15. Failure to do so meant that beginning with the check on January 1 of the next year, the Income Tax Remedy would be removed for an entire year. Two things emerged along the way that explained the problem in more gruesome detail. First, the people who were being penalized were mostly bonafide Oregon residents who (a) asked for tax extensions and (b) failed to recertify by the Dec 15 deadline. It also emerged that this was a costly penalty regardless of the reason why someone didn't recertify - illness didn't count, failure to get notification from PERS of the need to recertify, the dog ate the notice, whatever. Once the Tax Remedy was removed, the only way to rectify this was to recertify before the next Dec 15 deadline and get it restored for the following year. For many people, this amounted to an expensive and unappealable decision/mistake. Over the years, I've heard from many people caught in this trap, and from PERS about how helpless they are to remedy this because of the statutory wording.
Thanks to an eagle-eyed reader of my blog and in my newsgroup, it has come to my attention that the Legislature is considering a bill that would remedy this in a couple of ways. The bill - HB 2867 - is a bipartisan effort to redress the problem by allowing recertification of residency quarterly instead of annually (this doesn't mean that someone has to certify on a quarter-by-quarter basis). And, in cases where a bonafide resident lost the tax-remedy due to filing taxes late or other reasons, it supplies a mechanism to recover the erroneously eliminated remedy in a timely manner if the retiree can provide evidence of residency during the period where the tax remedy was discontinued. I haven't wandered deeply into the weeds of this bill yet, but two facts are important: a) the sponsors of the bill represent both parties and cover the political spectrum, which is a very good sign; and b) the bill has its first public hearing next week, which means that it hasn't already been shelved.
It isn't clear whether the bill would apply to those already trapped by this administrative nightmare. It also isn't clear whether this also means that people who move out of state and who are no longer eligible for the tax remedy will lose theirs sooner than they do now. But looking at this with a slightly longer view, I suspect that Oregon will end up the net winner in this case, if my previous sentence is true, since I suspect more people move away from Oregon than move back after living out of state. Only PERS knows this information, and since there has been no detailed analysis of the fiscal impact of the bill, it is impossible to know. But, if Oregon wins, and bonafide Oregon residents who inadvertently lose the tax remedy have a standard and relatively easy way to recover, then this bill benefits everyone and I could see no reason why it wouldn't pass. That would be very nice.
