A Grand Bargain on PERS, Public Safety

Oregon lawmakers settle in for real Monday and will quickly see, if they haven't already, that the 2013 session pivots on the outcome of two tough political decisions — modifying PERS and public safety reforms.

The legislature's only absolute duty is to approve a balanced budget and Governor Kitzhaber has teed up that task on the backs of saving a lot of money on PERS and new approaches to managing public safety. He also wants to slow the rate of growth of Medicaid and save $400 million in projected health care costs in the next biennium.

Squeezing money out of Medicaid rests on the ability of hospitals, doctors and health systems to, in Kitzhaber's words, "bend the cost curve" of the health care delivery system. But squeezing money out of PERS and Oregon’s public safety system falls squarely on the shoulders of legislators.

If there ever was a need for a grand bargain, this is it.

That's undoubtedly why legislative leaders have created a bipartisan, bicameral committee with equal numbers of Democrats and Republicans to address the public safety reforms — or, in legislative parlance, to provide both parties with political cover on what surely will be tough votes.

Leaders know there will be hell-no votes on both issues in both Democratic and Republican caucuses. Bipartisan majorities will be required if PERS and public safety changes are going to pass this session.

Kitzhaber served up two PERS changes — dropping a tax-related adjustment for retirees who now live out of state and changing the cost-of-living adjustment calculation for retirees. The first idea probably passes muster, but it only saves $55 million or so. The COLA adjustment, which would apply a cost-of-living adjustment only on the first $24,000 of retirement benefits saves a lot more — $800 million — but faces questions about its constitutionality.

Public safety changes came to the legislature from a bipartisan commission appointed by the Governor. In the last election cycle, many Democratic legislators came under fire for a vote on so-called “earned time” leaving all legislators wary about the political ramifications of such a vote.

It is not impossible to see how Democrats and Republicans can cut a deal on both issues that can pass the House and Senate and prevent a big budget hole in the 2013-2015 biennium. It's also possible to foretell a fair amount of political jockeying to get to the deal.

So while daily headlines talk about issues such as restricting the size of automatic weapon magazines or creating independent governing boards for the state's three largest universities, remember the real battle is being waged around the table dealing with PERS and public safety reforms.

Failure to cut the deal means legislators have to be willing to pass a Plan B budget — one with nearly $1 billion in additional cuts. A grand bargain may look pretty good in comparison to a Plan B budget.