Legislative leaders on Monday released a pair of proposals to trim the costs of state government. The proposals could be the final pieces of the puzzle as legislators try to fill a $1.4 billion budget shortfall.
But if the proposals fail to generate enough support on both sides of the aisle, the result could be a special session, or a series of special sessions stretching into the fall.
The key storylines of the 2017 Legislature have been clear since well before the session started in February, but the biggest proposals on the biggest issues only have come into focus over the last couple of weeks. There are a couple of reasons for that: In some cases, legislators have been cagey about releasing too many details until they think they've lined up bipartisan support. (We suspect this is part of the reason why the bill outlining transportation projects — and how to pay for them — didn't officially get released until last week.)
There's another reason for the delay: These often are complicated, tricky issues that take time to explore and debate, although (frankly) the Legislature should have gotten serious about the state's Public Employees Retirement System and its $22 billion unfunded liability years ago. And it's worth keeping in mind that legislators are working with a record amount of revenue as they craft the state's budget for the next two years: The problem is not revenue, but rather that estimated state expenditures are running about $1.4 billion ahead of that record revenue number.
In any event, legislative leaders on Monday released a pair of related proposals: One, from Senate President Peter Courtney and Sen. Mark Hass, aims to find ways to save the state money on PERS, mainly through employee cost-sharing. Their Senate Bill 1068 calls for employees to contribute 1 percent of their salary to the pension fund beginning on July 1, 2018.
Hass and Courtney said the bill could save governments across Oregon $434 million a biennium when fully implemented in 2019-21. However, chances seem good that the actual savings would be less, for a variety of reasons. In fact, The Oregonian estimated that the impact on the state budget over the next two budget years would be less than $50 million.
This PERS bill is meant to go hand-in-hand with efforts underway to increase corporate taxes. Unions are dubious about reforming PERS, but some have said they would consider it as long as it goes along with revenue reform.
The other cost-cutting bill, Senate Bill 1067, contains some of the same ideas that legislators have been floating all session long:
• Eliminating automatic inflation increases to agency services and supply budgets. This could save $211 million in 2017-19, legislative leaders said.
• Slowing the pace of hiring when vacancies occur. Estimated savings: $145.3 million.
• Eliminating positions left vacant for more than six months. Estimated savings: $67.8 million.
To state the obvious: The cost savings connected with these two bills are not sufficient to fill that $1.4 billion shortfall. And, in fact, many legislators have been working under the assumption that balancing the state budget will require both spending cuts and additional revenue.
The big question now is this: Are the cost savings in these bills enough to generate enough Republican support for increasing taxes? It's not an idle question: Some Republican support will be required for the Legislature to pass a tax increase.
Legislators may well have to do some additional budget-trimming before any kind of compromise emerges on taxation. And that just heightens the odds that the Legislature's work might not be done by the time the regular session ends on July 10. (mm)