By PETER PRENGAMAN
The Associated Press

SALEM — Oregon treasurer Randall Edwards wants to ask voters this September to allow the state to refinance debt it owes on its retirement system, a change he says could save hundreds of millions of dollars.

"This is like refinancing a home mortgage," Edwards told a House Revenue Committee. "We want to take advantage of low interest rates and save taxpayers money."

Edwards' plan, approved by the committee Thursday, would issue bonds to refinance about $2 billion worth of debt on the Public Employees Retirement System.

The state is now paying an 8 percent annual interest rate on that debt. Because the Federal Reserve has slashed interest rates on borrowing in an effort to stimulate the stagnant national economy, Oregon could pay only about 5 percent, Edwards said.

That would save about $90 million over the next two years, and more than $1 billion in the next 24 years of bond repayments, Edwards said.

Edwards said he waited so late in the session to propose the refinancing idea because he wanted to see what lawmakers did with pension reform, and if their actions could erase the deficit completely, making refinancing unnecessary.

In May, the Legislature passed a sweeping package of laws intendend to scale back retiree benefits. Taken together, the changes cut about $9 billion off the $17 billion longterm shortfall facing the system.

If the Legislature passes Edwards' proposal, House Joint Resolution 18, it will be referred to voters for a Sept. 16 special election. That's because the large refinance sum requires a constitutional amendment, which voters must approve.

Rep. Mark Hass, a Portland Democrat on the committee, said it won't take much to convince voters.

"Any taxpayer who has refinanced their home would understand while we are doing it," Hass said.

Getting it through the Legislature on time, however, may be difficult.

Fred Neal, Campaign Finance Manager for the Oregon Elections Division, said the proposed measure has to be passed by July 18 in order for it to be on a September ballot.

Otherwise, the state will look for another way to refinance that doesn't require voter approval, said Kate Richardson, Edwards' chief of staff.

Richardson said that's because the low interest rates are too good to pass up. For example, if the economy rebounds in the next couple months, the rates could go back up, she said.