WhatchamaColumn

By Jeb Bladine
Of the News-Register

Oregon's Public Employee Retirement System long ago qualified as scandalously expensive. The latest news from Salem simply adds another entry to the diary.

The governor and other leaders promised to cut into excess PERS costs, but what emerged from the 2011 Legislature was inadequate and, to be blunt, insulting to Oregonians.

The background is tortuously complicated, as is the norm with PERS issues.

Until the late 1980s, PERS benefits were exempt from state income tax, while Oregon taxed federal government and private sector pensions. In 1989, the U.S. Supreme Court ruled that state and federal pensions must receive equal tax treatment.

The Legislature decided to tax all pensions, but gave PERS recipients extra benefits to offset the tax. Oregonians voted down that plan.

In 1991, the Legislature voted again to tax all pensions and partially raise PERS benefits. The Oregon Supreme Court, however, ruled that this violated PERS contracts unless the retirees were fully reimbursed. Legislators enacted that order in 1995, including retroactive payments to 1991.

Meanwhile, federal retirees successfully sued to recover past taxes they had paid. It all cost the state hundreds of millions of dollars.

Since then, many PERS retirees have moved out of state, thus no longer pay Oregon taxes. Why, then, do they continue getting that extra "tax-offset" benefit?

The answer was classic PERS-speak: That benefit, some said, became another contractual obligation of the state. Of course, that answer conveniently ignored language from the 1995 bill, which said: "No member of the system É shall acquire a right, contractual or otherwise, to the increased benefits É ."

Should we at least be happy that, 16 years later, the Legislature finally came to its senses? Well, not quite. I forgot to mention that the benefit takeaway applies only to PERS retirees who move out of state after Jan. 1, 2012. Retirees who left or leave the state before then will continue to get that extra benefit to offset taxes they no longer pay.

There was the normal outcry from people who read the fine print. But as so often happens with PERS issues, an excess of legalese caused most people to ignore the story.

I can only say - to the lawmakers, judges, unions and other overseers who helped PERS become what it is - that your success at obscuring public debate on this grossly expensive program is deserving of a Wizard of Oz lifetime achievement award.

Jeb Bladine can be reached at jbladine@newsregister.com or 503-687-1223.