SALEM, Ore. — The Oregon state Senate on Thursday approved a Democratic plan to cut pension benefits for retired government workers, voting along party lines over vehement objections from Republicans who said the plan was timid and anemic.
Democrats say the measure would allow more spending on education by reducing taxpayer contributions to the Public Employees Retirement System.
Business groups, Republican lawmakers, school board members and others said the Democratic plan falls far short of achieving the savings needed to stabilize the pension system’s rising cost to taxpayers.
Retirees and public-employee unions also objected passionately, saying the Legislature is reneging on a promise of retirement benefits in exchange for a lifetime of work for a government agency.
The measure would save state and local governments about $460 million over the next two years, mostly by reducing cost-of-living increases for retirees earning more than $20,000 a year. Democrats also want the pension system to delay $350 million worth of taxpayer contributions into future budget cycles.
Severe investment losses during the Great Recession erased 27 percent of the pension fund in 2008, requiring steep increases in taxpayer contributions to make up the difference and limiting money available for state and local government services.
The bill goes next to the state House, which is also controlled by Democrats and could vote as soon as next week. Democratic Gov. John Kitzhaber has said he’ll sign it.
The cuts are almost certain to be challenged to the state Supreme Court, and even the bill’s proponents say it’s anyone’s guess whether the justices will uphold the cuts.