Oregon GOP reins in call for pension cuts

Latest proposal would save state $1.4B over two years



SALEM, Ore. — Oregon Republican leaders hoping to keep alive their demands for tougher cuts in pensions for retired government workers unveiled their latest proposal Thursday, scaling back their earlier demands but still pushing to go farther than majority Democrats say they’re willing to go.

Leaders of both parties have been talking in fits and starts for months about a compromise that would give Republicans the pension cuts they seek and Democrats the new tax revenue they’d like.

The latest GOP proposal would save state and local governments about $1.4 billion in contributions to the Public Employees Retirement System over the next two years through steeper cuts to inflation adjustments and a variety of other changes.

Some Republicans had initially fought for as much as $2 billion in cuts.

“The status quo is killing schools and local governments,” said state Sen. Ted Ferrioli of John Day, the Senate Republican leader. “These entities can’t sustain their basic programs in the face of PERS premium increases.

“Those cost increases are literally gobbling up programs and services.”

Republicans pitched their plan as a compromise that makes concessions to Democrats, although it would still affect current state workers, who Democratic House Speaker Tina Kotek has said should be protected from further pension cuts.

“This is not a compromise plan,” Kotek said. “This is far outside the middle ground the governor proposed and Democrats agreed to in order to make an historic investment in education.”

Democrats earlier this year enacted about $460 million worth of pension cuts, primarily by scaling back inflation adjustments on a graduated scale for retirees earning at least $20,000 a year. GOP lawmakers objected, saying the savings were paltry and wouldn’t address the long-term cost of retirement benefits.

Democratic Gov. John Kitzhaber this month proposed pension cuts that would save up to $900 million when combined with the earlier pension cuts. It would eliminate or scale back one particularly costly method of calculating pension payments known as the “money match.” Kitzhaber’s proposal would affect only inactive members of the pension system, who have left their government job but not yet started collecting their pension.

“The bad news is we’re still far apart. The good news is we’re still talking,” Kitzhaber said in a statement. “It’s time to get this done for Oregonians.”

The latest GOP proposal would cut cost-of-living adjustments much steeper than the bill Democrats enacted, virtually eliminating inflation increases for all but the first $20,000 of a retiree’s annual income. Republicans also propose making it harder for workers nearing retirement to boost their final salary for a higher pension payout.