Scott Bruun: Oregon’s Public Pension Catastrophe

Wednesday, May 06, 2015

Scott Bruun, GoLocalPDX MINDSETTER™

Tomorrow, May 7th, marks 100 years to the day that the Lusitania was torpedoed and sunk off the coast of Ireland by a German U-boat. In his new bestseller “Dead Wake,” historian Erik Larson vividly recounts the ship’s final voyage and demise. A man-made catastrophe that resulted in the death of 1,198 people, including women, children and infants.

What’s most startling about the Lusitania story is that the risks were so well-known. Passengers knew that German submarines were indiscriminately attacking shipping, including passenger liners. They knew that submarines hunted the waters that the Lusitania would cross. Passengers were even warned by the German government via ads placed in the New York Times. And yet they still sailed.

As Larson describes, one of the more chilling details of the story is how passengers watched from the side-rail and the ship’s café, transfixed, as the deadly torpedo propelled across the water toward them. A brief time to watch and to ponder before the pending explosion. A front-row view of their pending doom.

Perhaps fitting for the anniversary, all of Oregon now stands at the rail watching. Safe for a brief time, but now able to see and ponder the slowly-approaching torpedo of PERS.

The Supreme Court ruling last week, which reversed moderate PERS reform from 2013, was not unexpected. A bad contract was written, and now a bad contract will be enforced.

The question is, ‘what do we do now?’ How does the State of Oregon ensure that it can deliver the services that it promised and that the people of Oregon pay for? In light of a giant step backward with PERS, how do we keep the lights on at schools?

The wrong way to answer these questions will be via the path that legislative Democrats propose. Democrats will say that the PERS situation is “out of our control” because of the Supreme Court decision, and thus tax increases are now the only solution.

Democrats will couch this as a “necessary sacrifice,” perhaps even an “investment.” And because Democrats need a super-majority to raise taxes in Oregon, they’ll use every trick in the book to get it done. Watch for legislative efforts to link tax increases with like-kind reductions in tax credits, therefore dancing around the super-majority rule and obviating any need for Republican support.

The right way to address PERS, on the other hand, is to first acknowledge that we cannot tax our way out of this crisis. Oregon is already over-taxed, with among the highest personal and business income tax rates in the country. Oregon’s middle-class, already falling further behind, cannot afford to bail the state out of its bad contracts.

Nor is cutting services a viable option. As it stands today, our roads are bad; our colleges are underfunded; and our school days, weeks and years are already too short. We are also well behind-the-curve in mental healthcare services, support for foster children, and in adequately addressing hunger.

The only way for Oregon to manage the PERS problem is to grow our way out of the problem. Oregon needs more tax revenue, but not through higher taxes. Instead, Oregon needs more tax revenue from more businesses doing business; from existing businesses doing more business; from newly created private-sector jobs; and from wage growth within existing jobs.

Oregon needs something we haven’t had in decades: A pro-growth agenda. An agenda where growth in tax revenue comes from growing the economic pie. Not from bigger chunks of a shrinking pie.

Imagine the growth in jobs and small businesses we might see if we only had a competitive tax structure. Imagine the growth we might see if businesses and workers in Oregon were not hamstrung by politically-motivated regulations, like the new “clean fuels” tax, or European-style workplace mandates. Imagine the growth we would see if Oregon’s political ‘powers-that-be’ finally voiced some genuine appreciation for the load the private-sector shoulders, year-in and year-out.

Choose growth, or face decline. Choose growth, or watch as PERS eats-away at Oregon’s future. Watch as Oregon’s public-schools continue to under-perform. Watch as the school years continue to get shorter, our roads get worse, and our colleges struggle to compete.

Choose growth, or stand by the rail and watch as the slow torpedo of PERS sinks our ship of state.

Scott Bruun is a fifth-generation Oregonian and recovering politician. He lives with his family in the 'burbs', yet dutifully commutes to Portland every day where he earns his living in public affairs with Hubbell Communications.