Democrats unveil their PERS cut plan

SALEM — Oregon Democrats on Monday unveiled the details of their proposed cuts in pensions for retired government workers, leaning hardest on workers with larger retirement checks.

Public employee unions denounced the plan as illegal and irresponsible, and Republicans said it fell far short of what's needed to fix a pension system that's consuming an increasing share of tax dollars.

Democrats, who have majorities in the state House and Senate, said the plan would save state and local governments about $455 million over the next two years. That's less than competing proposals by the Oregon School Boards Association, legislative Republicans and Democratic Gov. John Kitzhaber.

Democrats said their plan is more likely to stand up in court and is more equitable to low- and middle-income retirees. They plan to hear public testimony on their bill Wednesday afternoon.

Democrats say the cuts to the Public Employees Retirement System are needed to fund schools at their desired level, $6.75 billion.

"We're trying to both stabilize the PERS system and make sure we're taking care of our obligations to the next generation," said Rep. Peter Buckley, D-Ashland, the House's chief budget writer.

The measure sticks closely to a framework Democrats outlined earlier this month. In addition to the $455 million that their proposal would save, Democrats want to push back $350 million in government pension contributions into future years.

Public-employee unions responded fiercely, saying the proposal is an unconstitutional breach of a contract between the state and its workers. They say the pension system's unfunded liability is the result of investment losses during the Great Recession, and they want the state to go after bankers they blame for the losses.

Pension checks for retired government workers rise at a rate of 2 percent a year.

The Democratic proposal would create a new graduated scale. The first $20,000 would continue growing at 2 percent a year. The next $20,000 would grow at 1.5 percent a year, and the next $20,000 at 1 percent. Incomes above $60,000 would rise by 0.25 percent a year.

Their proposal also would eliminate a tax break for retirees living out of state that's intended to make up for state income taxes.

On top of cutting pensions, Democrats also are pushing to raise more revenue from wealthy taxpayers by limiting tax credits and deductions, but they haven't spelled out their plan yet.

The bill is SB 822:

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